EXCLUSIVE - GRUIA STOICA, GFR: "All major companies use financing for significant investments" - 23.07.2013

• "After the signing of the contract for the privatization of CFR Marfă we will cooperate with the Competition Council"

All big companies use loans for significant investments, says Gruia Stoica, the owner of the Grampet group, which includes Grup Feroviar Român (GFR), the company which was designated as the winner of the privatization of CFR Marfă, as president Traian Băsescu said that banks are not willing to lend large amounts to companies.

Gruia Stoica answered several questions we asked him yesterday, and he told us that and said that GFR has an old relationship with Raiffeisen Bank Austria, from which it has obtained the letter of good standing and the letter of bank guarantee in the privatization process it has won.

GFR will begin the cooperation with the Competition Council after signing the contract for the sale of the stake in CFR Marfă, Gruia Stoica told us. The Competition Council expects the notification file from GFR (which controls about 30% of the market) in order to determine whether its acquisition of CFR Marfă (with a market share of almost 50%), will result in the creation of an economic concentration.

Reporter: Will you access a syndicated loan in order to pay the almost 200 million Euros which you have pledged to pay for half of the shares of CFR Marfă?

Gruia Stoica: All major companies do that when they make investments of that scale, they borrow money, and we are a major group, I don't see why we couldn't do the same thing. They are all in a hurry to criticize us for the fact that we want to do a good thing for România, because it isn't just our privatization, it is the privatization of the entire country. It is our success, everybody's.

Reporter: Speaking of the money you are going to use to pay for this deal, did you continue your cooperation with the bank, after Herbert Stepic was replaced as the CEO of Raiffeisen Bank International, from whom you obtained the letters of good standing and the letter of comfort?

Gruia Stoica: First of all, the letter of guarantee was signed after Mr. Stepic left Raiffeisen Bank Austria. Second of all, Herbert Stepic is just one individual, Raiffeisen is an institution, and we have a very old relationship with the institution. There is no connection between the two.

Reporter: Did you send the notification brief to the Competition Council?

Gruia Stoica: We are waiting to sign the contract first and then we will take care of the cooperation with the Competition Council.

Reporter: Were you told why the contract for the sale of CFR Marfă has not yet been discussed in a Government meeting?

Gruia Stoica: They (ed. note: the Ministry of Transports) have made some changes to the contract and it needs to be approved. The Government is probably reviewing it carefully, because they are standing behind it.

Reporter: Weren't you told when you are going to sign it?

Gruia Stoica: I don't know anything in that regard, we weren't informed, I didn't ask.

Gruia Stoica recently told the press that the amount he would pay for CFR Marfă comes from his own funds, but that most of the amount would come from loans.

Aside the about 200 million Euros representing the amount of the deal, to also invest another approximately 200 million Euros in CFR Marfă and to make environmental investments of 1.5 million Euros. He said: "If I don't pay that money, I run the risk of losing 28 million Euros - 10 million of the letter of guarantee which I have filed with the Ministry of Transports and another 18 million deposited in an escrow account. (...) I don't think I could have risked 28 million just for the sake of receiving a trophy. (...) We live in Romania and I doubt that anybody has 200 million Euros cash. We have some of the money, because no bank or foreign financial institution can give you that money, but most of the funds will come from loans. (...) We have assets of over 400 million Euros, GFR is bankable, we talked to foreign financial institutions and that money exists ".

GFR was designated as the winner of the privatization of CFR Marfă on June 20th, but the sale contract between the Ministry of Transports and the representatives of the winning company has yet to be signed.

Meanwhile, Relu Fenechiu, who handled the privatization process, was sentenced to five years in prison, in the "Transformatorul" (ed. note: power transformer) case. Prime Minister Victor Ponta is currently serving as interim minister of Transports, and Ovidiu Silaghi has been nominated for taking over the Ministry of Transports.