EXCLUSIVE - THE PLAN PROPOSED BY THE RECEIVERS The working capital of Oltchim, to be provided by the investors

The receivers of Oltchim (Rominsolv and BDO) are proposing to investors interested in acquiring the plant of Vâlcea to participate financially in the stage which precedes the reorganization.

As a result, Oltchim can get the amount of at least 50 million Euros it needs to increase output to a profitable level, which will keep the plant operational until autumn, guarantees its chances to secure orders until 2014 and can successfully implement the reorganization, which would allow the switching of the company to private ownership to make it a success for the government as well as investors.

The solution for the rescue of Oltchim proposed by the directors, which we hereinafter present exclusively, assumes that, in exchange for the option of participating in the reorganization, the pre-selected investor would assume the repayment of the amounts to be paid to the creditors that have accepted to provide financing for the working capital of Oltchim SA, or to lend to Oltchim SA the amount of at least 50 million Euros needed for working capital.

For each of the ways of taking on the financing, the pre-selected investor will have the position of a creditor which will benefit from the privilege of the current receivable resulting from the continuation of the insolvency procedure. Also, with the agreement of the creditors' committee, collaterals in favor of the pre-selected investors, out of the list of assets of Oltchim.

With the agreement of the creditors' committee, the investor will be allowed to take over the management of "Oltchim 2", regardless of whether they will be designated as the winners in the reorganization process or not.

The new company, "Oltchim 2" will be fully owned by the current "Oltchim" and will comprise the production facilities and other viable assets, the brand, the intellectual property rights, the customers, the contracts and the employees. "Oltchim 2" will be led managed by an management team elected by the creditors, but the investor pre-selected in the monitoring period (the one ending upon the confirmation by the bankruptcy judge of the reorganization plan approved by the creditors).

In the end, the shares issued by "Oltchim 2" (for Oltchim SA) will be assigned, according to the terms of the reorganization plans, to the pre-selected investor, or, in the event of the failure signed with them, to another strategic investor.

The receivers consider that the involvement of the investors prior to the approval of the reorganization plan is very important, because Oltchim urgently needs the working capital which would ensure its profitability. The financing will be accompanied by measures for reducing the operating costs which would improve the efficiency of the company, rebalancing the patrimony, starting from the real, market value of the company's assets and liabilities, as well as the rescheduling and the resizing of the debts of Oltchim according to its real possibilities of payment, which will be included in a realistically determined flow of collections and payments.

The management of "Oltchim 2" will be done under the control and the oversight of the receivers of Oltchim SA, based on a management contract which will stipulate the continuation of the activity by way of this new company and the reaching of the profitability threshold.

This plan of the receivers will be submitted for approval to the creditors of Oltchim in the immediate future. The confirmation of the reorganization plan by the bankruptcy judge is estimated to occur in October this year.

Oltchim entered insolvency in the beginning of this year, after the attempt to privatize it failed in September 2012. TV producer Dan Diaconescu won the call for tenders for acquiring the majority stake which the state held in Oltchim, but the privatization was annulled because Dan Diaconescu did not pay the money within the deadline imposed by the authorities (ten days after the designation of the winner of the call for tenders).

The total of the receivables of Oltchim is about 800 million Euros, and the biggest creditors are the Authority for the Management of the State's Assets (AAAS), Electrica SA, BCR and Banca Transilvania.

Varujan Vosganian, the Minister of the Economy, recently said that the Ministry has received ten letters of intent for acquiring Oltchim, from major companies from India, Qatar, Great Britain, Germany, Israel or Azerbaijan.

The main shareholders of Oltchim are the Ministry of the Economy, with a stake of 54.8% of the shares and PCC, with a direct and indirect stake of about 33% of the shares.