AVAS To Revitalize Fortus SA Production

Doru Mocanu, Iasi

The State Assets Recovery Authority (AVAS) audited Fortus SA - Iasi on 2-5 March to document the operations of the company during the period when it was controlled by former majority shareholder Metalexportimport SA - Bucharest, as well as the content of the reorganization programme. According to AVAS President Ioan Nani, the conclusions of the audit have recently been finalized. Among others, the document stresses the need for changes in the organizational breakdown section of the reorganization programme.

"Generally, the conclusions of the audit stress the need to rework the reorganization programme of the company by including certain measures proposed by AVAS, including the need to keep the core production personnel and to take professional reconversion measures, especially for the administrative staff. It is also stressed that measures need to be taken to ensure a dynamic increase in business," Ioan Nani added.

The AVAS auditors also noted the need to change the administrative receiver of Fortus SA, who had been appointed by the former majority shareholder and therefore did not represent the Romanian State, which had retaken control of the company in 2008. "This measure was in the meantime taken by the General Meeting of Shareholders held on 19 March," Nani added.

Despite its strategic importance within the national economy, Fortus - Iasi has been declared insolvent upon the request of a number of creditors. According to the reorganization programme - which is pending approval by the creditors, a number of plots of land, industrial spaces not used for production and obsolete technology will be put up for sale to pay the debts accumulated by Fortus.

Thus, the company could sell 50 hectares of land, the administrative building and its parking lot, three storage halls, seven idle production halls and a number of obsolete pieces of equipment. The technical appraiser has priced the assets to be auctioned off at approximately 85 million EUR. The scrap iron is expected to sell for at least 5 million EUR. Fortus owes some 75 million EUR, of which 60 million EUR to the Iasi County Public Finance Directorate.

The reorganization programme, as prepared by the management of Fortus SA and the administrative receiver, also stipulates an increase in the production capacity of the plant. The plan is to have at least 15 million EUR after all debts have been paid and use the funds to revitalize production. If so, the company will procure new technology to increase productivity and repair viable technology already in place.

The company will also attempt to revive domestic and export markets. Within the same programme, Fortus will lay off 500 employees from the existing 1,600 employees. However, AVAS is trying to minimize the job cuts by reconverting non-production to production personnel in an effort to support prospective production growth.