Borza: "The IPO of Hidroelectrica, affected by the regulated price and the special buildings tax"

The price of energy delivered in a regulated regime, the special constructions tax and the tax for water processing are factors that will affect the listing of Hidroelectrica, Remus Borza, the former president of the Supervisory Board of the Company said yesterday.

He explained: "The company will raise less money from the BSE, following the sale of a 15% stake of the share capital, because it has significant additional expenses this year. The ANRE (ed. note: the regulator of the energy market) has approved a tariff of 114 lei/MWh for the amount of 5.4 TWh which Hidroelectrica will supply, this year to the regulated market, which means a loss of about 30 million Euros for the company. The tariff that would cover the costs would be about 160 lei/MWh. Moreover, Hidroelectrica has to pay about 40 million Euros for the tax levied on special constructions. The water costs are 60 million lower than the total amount paid in 2010 to < < Apele Române > >".

Lawyer Borza still supports the idea of taking the company public, which he says would provide the company with a capital injection for investments (the operation will take place through a share capital increase), greater transparency (periodical reporting, stricter verification of the management) and the reduction of the political interference in the activity of the company. In an interview granted to BURSA in September, Remus Borza was saying: "Hidroelectrica will make a profit of at least 1 billion lei in 2013. The state has a good chance of making 300 million Euros from a stake of 10% of the shares".

In December, the Government decided to sell 15% of the shares of Hidroelectrica on the stock market. The IPO is scheduled to take place at the end of Q1 2013, after the audit of the 2013 financial statements.

Hidroelectrica will select a new brokerage firm for the IPO, and any interested buyers may submit bids by January 20th, 2014. Hidroelectrica has a share capital of 4.475 billion lei (1 billion Euros), owned by the state (80.05%) and the Proprietatea Fund (19.95%).

The former chairman of the Supervisory Board of Hidroelectrica also said recently: "For Hidroelectrica the funds obtained from the IPO will be a life saver for Hidroelectrica. Hidroelectrica is the most heavily indebted company in the Romanian energy system. The banks' exposure to Hidroelectrica currently stands at about 700 million Euros. I hope that the money raised from the sale of the minority stake of Hidroelectrica will go towards the retooling of the major groups such as the Vidraru, Dimitrie Leonida (Bicaz), Râul Mare Retezat and Mărişelu hydroelectric plants. These plants have over 1000 MW installed power in these plants, which account for 45% of the system's technological services. Hidroelectrica has the monopoly of the technological services in the national energy system, which are vital for its safety. The five major hydroelectric plants have exceeded their lifespan and together with the hydroelectric plants of Porţile de Fier I and Lotru-Ciunget, are vital for the national energy system".

• Holding Hidroelectrica - UCM Reşiţa - Hidroelectrica Serv

Energy maker Hidroelectrica, energy supplier UCM Reşiţa and maintenance company Hidroelectrica Serv may be included in a holding, according to the intention of the authorities, said Remus Borza, the receiver of UCM Reşiţa and former president of the Supervisory Board of Hidroelectrica. UCM Reşiţa, which has been insolvent since December 2011, has debts of over 859 million lei, of which 60% to the state budget, Agerpres informs.

"UCM Reşiţa is insolvent, Hidroelectrica needs retooling, and the most suitable supplier of hydroelectric energy tools is UCM. If UCM goes bankrupt, Hidroelectrica will be in serious trouble", said Borza, who added that the law regulating holding structures, which has been awaited for several years now, could show up in the beginning of this year.

Moreover, Borza considers that letter k) of the article 95 of the Insolvency Law s which stipulates that debts to the state budget may not be converted into stock should be abrogated, , and said that allowing such a measure is crucial to many companies that are in such a situation.

Remus Borza considers: "In the case of UCM, the state should not remain a majority shareholder, instead it can sell 20-30-40% of the shares, for a capital injection for the purpose of retooling and relocation, because the plant is currently oversized, as it currently spans 130 hectares".

On December 19th, prime minister Victor Ponta and the delegate Energy minister, Constantin Niţă, have attended the inauguration of the Racoviţa hydroelectric plant of the county of Sibiu. At that event, Niţă said that "perhaps in the first semester of 2014, UCM Reşiţa will enter the Hidroelectrica Consortium, and thus a completely integrated system construction and exploitation system will be created".

At the same event, Victor Ponta said that UCM Reşiţa must be saved. He asked officials from the economic departments to show him documentation presenting the company's situation.