"AMONIL", READY TO CHANGE ITS COURSE Electricity instead of fertilizer?

After losing the installations for making fertilizer in foreclosure, "Amonil" Slobozia (symbol: AMO) could become an electricity maker, more than three years after the shareholders of the company have approved a contract with "Interagro" for obtaining the equipment needed for cogenerating electricity. "Interagro" is owned by businessman Ioan Niculae, who is allegedly behind the two offshore companies that control about 50% of "Amonil".

This time, the shareholders of "Amonil" are being summoned on August 18th, to vote on the proposal to change the company"s main line of business, in order to replace it with the production of electricity.

The manufacturing of fertilizer would become the company"s secondary line of business, according to the notice to attend the General Shareholder Meeting.

The agenda has also included the approval to conclude a convention for setting up a right of surface by "Chemgas Holding Corporation", in favour of "Amonil", against a plot of land for the building and the commissioning of the co-generation investment project.

"Chemgas" is the company that took over the most important assets used for manufacturing fertilizer at "Amonil", following foreclosure of the plant.

Contacted by BURSA, the officials of "Interagro" have said that they only handled the import of the equipment which will be used for the cogeneration plant, and stressed that aside from that, "Interagro" has no connection to "Amonil".

"We had a contract with them (ed. note: Amonil) just for the import of the necessary installations and we have financed the purchasing contracts, for information on the volume of energy that will be produced or to find out the date when it is going to be commissioned you have to call the company, we do not have this kind of information", the officials of "Interagro" said.

In the General Shareholder Meeting of March 2008, the shareholders of "Amonil" have approved a long term contract between the plant and "Interagro", whose object was "the purchasing of two co-generation groups and of two methane gas compressors worth about 6.1 million Euros, intended to accomplish the installation for obtaining electricity and thermal energy through cogeneration".

At the time, the shareholders of "Amonil" have agreed to guarantee the payment owed to "Interagro" by setting up a lien over the Kellogg Ammonia installation.

Gheorghe Anăstăsoai, the general manager of the company, refused to provide any more information on the co-generation plant, claiming that the capital market legislation was extremely restrictive when it comes to the unequal dissemination of information prior to it being communicated to shareholders.

"Amonil is a listed company and we need to comply with the legislation of the capital market. You will find out more once we send our report to the Bucharest Stock Exchange", said Mr. Anăstăsoai.

"Amonil" Slobozia has a market capitalization of 16.68 million lei, based on yesterday"s price of 0.0159 lei. The company was foreclosed upon at the end of 2009, on account of a debt of about 54 million lei to the former Distrigaz Sud. The gas distributor sold the receivable to "Riverside Development", which in turn transferred it to Chemgas Holding Corporation.

"Zalois Ltd" Belize holds 32.19% of the plant, and "Jovline Ltd" Belize City is reported to hold 18.22%. Swedish "East Capital" holds 13.54% through "Salink Limited".

• Cristian Duţescu: The only activity of Amonil is supplying water to the town of Slobozia

Lawyer Cristian Duţescu, the representative of Swedish firm "East Capital", says that Amonil made a "bad" decision when investing 6.1 million Euros in buying the cogeneration installations in 2008, as "Amonil" still had to pay its debt to "Distrigaz Sud" at the time.

The representative of "East Capital" said: "The shareholders of AMO have decided in favor of buying two cogeneration groups and two methane gas compressors worth 6.1 million Euros, in March 2008, prior to Salink becoming a shareholder, even though at the time the company still had the unpaid debts which later caused it entering foreclosure. At the time, we thought the investment was a bad one.

We are completely unhappy with the way the contracts for the acquisition of the two cogeneration groups went, as they were bought from Interagro, rather than from the manufacturer itself. The terms and the conditions of the contracts were changed twice, as mentioned at pages 20-22 of the additional audit report published on the website of the Bucharest Stock Exchange in December 2010, which led to < Amonil > being forced to pay 50% of the of the total price of the price of the two cogeneration units earlier than initially planned, which affected the financial state of the company, which was faced with debts which caused it to lose all the assets which were used for production, following the foreclosure. Also, the deadline for the delivery was extended twice, which meant that < Amonil > would see a delay in reaping the benefits of the investment it made".

Duţescu also said he was unhappy with the fact that the company did not announce him that at this time, the only activity it still performs is supplying water to the town of Slobozia, as mentioned by the president of the Board of Directors in this year"s general shareholder meeting.

"We have suggested that the management of AMO take the necessary steps with the Trade Registry to record all those changes of the company"s line of business. Those who invested in the company on the BSE, knew they were buying stock in a fertilizer company. Or the company hasn"t been making any fertilizer since 2010, when the contracts for renting the equipment from Chemgaz were no longer extended, as its assets were taken over by Chemgaz, in October 2009", Duţescu added.