Dornafarm - Suceava Insolvency Schedule Set

The management of Dornafarm - Suceava (listed as DOFA on the RASDAQ platform of the BSE) has informed the Bucharest Stock Exchange (BSE) that a general insolvency procedure has been initiated against the company. The court has appointed Euroconturi SPRL - Suceava as temporary special administrator, which will perform the legal functions deriving from such appointment for a provisional fee of 1,500 RON. The court has also ordered due notification to be served to the shareholders, creditors, the Office of the Trade Registry of the Suceava County Court and all interested banks with regards to the state of insolvency ordered against Dornafarm.

According to the insolvency schedule decided by the court, the deadline for the submission of claims for receivables is 4 January 2010. Such claims will be verified, processed, displayed and compiled into a preliminary table by 22 January 2010. Potential contestations will be resolved by 9 February 2010, whereas the final table of claims will be displayed on 12 February 2010. The first meeting of the creditors, called to confirm the special administrator and decide upon its fee, has been scheduled for 25 January 2010.

Dornafarm SA - Suceava became insolvent upon the acceptance by the Board of Directors of a formal request for insolvency filed by the leading creditor, Farmexim SA - Bucharest.

Dornafarm SA - Suceava is a wholesaler and retailer of pharmaceutical and parapharmaceutical products via proprietary warehouses located in Suceava and Focsani and pharmacies in Suceava County and Botosani County.

Upon concluding the first half of the year, Dornafarm reported losses in the amount of 1,148,086 RON and a turnover of 4,371,068 RON derived from the sale of proprietary production worth 264,453 RON, the retail of pharmaceutical and parapharmaceutical products worth 1,773,125 RON via proprietary pharmacies and the wholesale of such items worth 2,333,490 RON. The turnover breakdown therefore indicates that wholesales account for most of the company"s revenues.

The management report for the first half of the year indicates that the company is facing severe liquidity problems as a result of rising prices for pharmaceutical products, the requirement of the Ministry of Health to maintain a permanent stock of certain products and the financial difficulties encountered by the company"s main customers, such as hospitals and pharmacies, both public and private.

Powerful competition on the pharmaceutical market and the lack of pharmaceutical products derived from substances made by the Romanian drug industry are diminishing the company"s chances to ensure fair and timely financing and therefore liquidities. Dornafarm has therefore been rendered incapable of honouring financial obligations to suppliers and is in turn facing problems collecting receivables from its customers.

As of 5 October 2009, Ovidiu Constantin Rabanca and Hedera Farm SRL had a joint stake of 32.49 per cent in Dornafarm. Asimed SA - Bucharest was at that time the second largest shareholder with 25.27 per cent.