THIS YEAR "Oltchim" almost doubled investors" money

Even though it brought the highest return to investors, gaining over 90% since the beginning of the year, the stock of "Oltchim" Râmnicu Vâlcea (OLT) is still far from its 2007 highs, when its was trading as high as 1.46 lei/share. For comparison, the price of OLT yesterday reached 0.49 lei/share.

The increased interest in the shares of OLT was further boosted by the fact that the Government announced in the beginning of 2011 that it has begun the procedures for the privatization of the plant, scheduled to take place sometime in H2 2012. The continuous rise of the stock caused the management of SIF "Oltenia" to sell its stake of about 6.4% in the company to an investment fund based in London, which deals in high risk investments, in distressed companies.

Contacted by "BURSA", Artur Jedrzejewski, the Polish who manages "Carlson Private Equity", which holds almost 12% of the plant, said that he has considered the possibility of the company not surviving until its privatization, as it has negative equity and issues with its suppliers.

Meanwhile, the management of "Oltchim" announced it has paid off all its debts to the state budget, and no longer has any arrears. The announcement came as, in the middle of last week, financial analyst Aurelian Dochia had presented the company as being one of the state"s largest debtors, with 1.1 billion lei in debt.

In spite of that, also last week, Victor Cazana, the head of the OPSPI, said that "Oltchim" is not exactly ready to be sold, and hinted that the government wants to turn the company around before selling it off. Victor Cazana announced that the authorities may begin negotiations for Oltchim to acquire the Arpechim refinery from "Petrom", after, at the end of 2009, it acquired the petrochemical division. This was in fact one of the things that the management of the plant had wanted to do for a long time, but which it couldn"t do due to its lack of funds, Mr. Cazana said.

For 2011, the management of "Oltchim" has budgeted total revenues of 2.43 billion lei, and a gross profit of 2.1 million lei. The company plans to invest a total of 600.5 million lei, of which 188 million lei of its own resources and the rest from bank loans.

The officials of the company said that the budget of "Oltchim" was built around a strategy which integrates the petrochemical operations, scheduled to start in June.

"This will lead to an increase in production compared to 2010, when the company operated at 35% of its capacity", the company officials said. They stressed that rushing the privatization of Oltchim, prior to the company achieving its investment program and beginning to operate at full capacity, would represent a losing arrangement for the Romanian state.