Letter for shareholders

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March, S'n,2OI2
Dear shoreholder,
Due to our consistentopenesstowardsour shareholders,
we remindyou some of the detailsof
the share capital increase,item found on the agendaof the ExtraordinaryGeneral Meeting of
Sharehotdersof Aprit 5th75tt', zoLz.
Increasingthe portfolio performanceth rough:
o a diversified
portfoliothat will allowgoodyieldsand increased
dividend
o a professional,
portfolio
active
management
o maintaininga low riskprofileand a balancedcashapproach
Coherentinvestmentstrategiesand policies,defined on medium and long term
o multiannualstrategies
2011-2013(www.sifm.rolshareholders/OGMS
april 2011)
o investmentpolicy statements,annuallyreviewed in relation to macro-economic
context,
marketdevelopments
and how objectivesare met, amid a continuousprocessof restructuring
the holdingsof SIFMoldova
o creatingthe conditionsthat will allow us to benefitof the investmentopportunitiesthat will
appearon the capitalmarketduring2OL2:Romgaz,Hidroelectrica,
Nuclearelectrica
o maintainingthe principlesin our future activity:continuity/ predictability,
dynamic/ active
management,
adaptabil
ity,thoughtfulness,
financialequilibrium
Dividenddistributionpolicy
o the Boardof Directorsrevealeda dividendpolicy,which is a predictabledividendpolicy,which
presentsthe factorsaffectingthe distributionof dividends
o the dividendpolicyensuresthe shareholders
the possibility
of fallingSlF2sharein the short /
medium/ longterm holdings
. constantlyincreasing
evolutionof the dividend,reachingthis year to representabout 90%of
cash
the adoption of Corporate GovernanceRegulationby SIF Moldova in 2OLL representsthe
insurancefor proper assimilationand implementationof mechanismsand principlesof good
governancein the activityof the company
(www.sif m.ro/a bout_us/corporategoverna nce_regulation)
o establishing
transparentcriteriaand procedures
for electionof Boardmembersand executive
management
o it was provideda boost in managementperformance,includinguse of expertiseof new
membersfrom the Boardof Directors;
the directorsand managersof the companyhavesigned
contractsfor administration/ managementfor the current mandate,documentswhich are
madepublic (www.sifm.
ro; www.bvb.ro; www.cnvm.ro)
o increased
transparency
throughadvertising
o improvedprotectionof shareholders'
rights
Developingthe investors'relationship
SIFMoldovahad a constantpositionon the capitalmarketto supportthe growth of the activerole
of institutionalinvestors,
residentsand nonresidents,
by:
' constantconcernfor harmonization
of the Articlesof Incorporation
with Europeanlegislation;
since2008we havetried to calla EGMSin orderto changeit;
o publicsupportof any initiativeon increasing
the holdingof sharecapital;
o provide ways of voting that allows easy exercise of options (electronic
voting, a
recommendation
bythe EuropeanDirective,
was introducedsince2008,keepingit so far)
' continuousimprovementof communicationwith shareholders,
trying to provide increased
responsecapacityand portfoliotranspare
ncy:
- meetingall reportingobligations,
that are presentedin Englishand Romanian
- postingon our websitesomeadditionalinformationbesides
the mandatoryones
- openingand maintaining
forumsdedicatedto specificevents
- in orderto increasevisibilityto a broaderbaseof institutional
investors,
both domestic
and international,
we have organizednumerousevents,have participatedin regional
conferencesregardingemerging markets so that we could continue to provide
investorswith the latestinformationaboutthe company
SlF2shareperformance
o in 2012,in its industry,SlF2sharerecordedthe highestprice,the lowestdecreasein net asset
valueper unit and hasthe secondpositionin terms of yearlyresult;lately,the performanceof
SlF2sharepriceis abovethe sectorialindexBET-FI;
o SlF2shareprice hasappreciatedsignificantly,reducingthe discountfrom net assetvalue per
unit (the lowest gap Fa%l was registeredin January 2OL2lwhile increasingthe liquidity on
the market, context in which we adoptedthe decisionto conveneEGMS.
The propositionof increasinsthe sharecapital
After a detailedanalysisand after discussions
with intermediaries
and someof the major investors
operatingon the Romaniancapitalmarket,the managementof the companyhasannouncedsince
the beginningof Januaryits intentionto increase
the sharecapital.
The registrationon the agendaof April 5th75tt.2012 EGMSwas drivenby favorabledevelopment
of the sharecapitallevelof representation
in GMS(in November2011OGMS,when the ownership
fimit was L%,thiswas360/o)
and the maintenance
of investmentopportunities
that will ensurethe
use of SIFMoldovaexpertiseboth in the managedarea and new sectors,that will lead to the
implementation
of the investmentpolicystatementin conjunctionwith a balancedcash.
thus:
increasingthe share capital from reserves(by increasingthe share nominalvalue or the
n u m b e ro f s h a r e s )t h
, u sm a i n t a i n i ntgh e w e i g h th e l db y e a c hs h a r e h o l d e r ;
2. capitalizationof dividends- becausethere is the uncertaintyof meetingthe quorumfor the
EGMS,this propositionis not in shareholders'
benefiU
3 . increasingthe sharecapital by cashcontribution,by increasingthe nominal value of sharesthis method can be determinedonly by the vote of all shareholders
(Law3t/tgg1, art.zL1,
alin.4);therefore,cannotbe done becauseit is not possibleto achievea quorum of IOO%of
the sharecapital.
Sincethesealternatives
couldleadto litigationor would requiresomeadministrative
costsrelated
to operationsthat are not justifiedby the benefitof the operation,theseopportunitieshavebeen
temporarilyabandoned,
for not compromising
the primaryobjectiveof the sharecapitalincrease,
whichis attractingcash.
The characteristics
of the sharecapitalincrease
1. The sharecapitalincreasewill be accomplishedin two stages:
o the first stage,addressedonly to existingsharehotderson recorddate;
o stage two, addressedto the investingpublic with the shares unsubscribedin the first
stage.
2. The advantagesof the first stage- addressedonly to existingshareholderson record date are:
o
the strengthening
of the shareholders
holdingat an attractiveissueprice,very closeto
thenominalvalue;
o
the possibilityof increasingthe ownershipshare of the capital,through trading the
preferencerightson BSE;
o
tradingthe preferencerightsandthe possibility
of tradingthe allotmentrights
Giventhat the proposedgrossdividend isO.22RON/ share,the subscriptionin stage l, at a
2:1 allocation ratio and at a subscriptionprice of 0.11 RON/share,majorly reduces the
financialburden for shareholders.
3. In the second stage addressedto the investing public (accordingto art.i-3o from CNVM
Regulation no.t / 2006l.
Giventhe shareprice developmentand correctionand the signalsreceivedfrom the capital
market (regardingthe constraintsimposed on institutionalinvestorsin terms of funds'
corporateSovernanceprinciplesand voting policies),the Board of Directors,together with
the advisory and brokerage consortium, will estabtishthe subscription price taking into
consideration:
an oDtimalmix betweenobiectives,
with emphasison preservinq
the positionwon bv
(consistencv
shareholders
in the first staeeof subscription
offeredto the shareholders
reeistered
on reference
date- March14th20121;
of the offer.
fn the event that the subscriptionsin secondstageare below !O0o/o,
the shareholderswho have
subscribedat this stagewill benefit from an increasein the percentageof ownership.
Establishingdifferent size of installmentsto be allocated to institutional investorsand retail
investors,in caseof oversubscriptionwill also be taken into consideration.
In casethe offer is fully subscribedin secondstage,SIFMoldova will attract a significantamount
of financial resources,thus increasing its performance potential, to the benefit of the
shareholders.
The Boardof Directorswill initiatethe selectionof the consortiumthat wilt mediatethe increasing
and expectsto advancein the project,so it can be put in placeimmediatelyafter the decisionof
the EGMSof April 5tn/6tn 20L2.
Through this proposed share capital increasewith cash contribution, as well as through our
dividend policy, are met both shareholdersneedswho want to cash consistentdividends,and
those who want to maintain/strengthentheir stakein SIFMoldova.
The communicotion between investors and StFMoldovo remains one of the key instruments to
inform investors about the latest developments and to get a feedback needed for d revision, if
necessary,of the presented strotegy.
We invite you to exerciseyour vote in person or by correspondence,,by mail or electronic
tro nsmission(occessingwww.sifm.ro) u ntilApril td, 2072.
We would be honored rI you choosethe direct porticipation in the GeneralMeetings of April Sth
/* zotz.
President& CEO
CostelCEOCEA,
Phd