FENECHIU: "THE LAST STEP IS MERELY A CHECK" GFR - all alone on the train of the privatization of CFR Marfă

Grup Feroviar Român (GFR), controlled by businessman Gruia Stoica, is the only competitor left in the race for the privatization of CFR Marfă, after Transferoviar Grup, which was on the shortlist as part of a consortium with Austrian investment fund Donau Finanz GMBH & Co KG, withdrew from the process.

Even though there are still voices, maybe louder than ever which claim that the procedure for the sale of 51% of the shares of 51% of the shares of the railroad operator should stop here, to be resumed later, transports minister Relu Fenechiu has no doubts that CFR Marfă will have a new owner today.

The official told us: "tomorrow (ed. note:), at 11:00, I will open the bid and declare the winner. We only have one step left, but it merely a check".

He insisted that "the rules were not changed mid-game", like some experts claim: "The conditions of a privatization cannot be changed. We didn't change the terms. When we began the procedure we had a book for the presentation of the company. Because we were forced to do this privatization in an incredibly short time, basically impossible, we have conducted certain actions simultaneously. The documents which presented the company mentioned that the debts of the companies would be converted into stock. We did not touch the share capital, because the conversion has not been made through a share capital. We also didn't change the capital by transferring some assets from the portfolio of CFR Marfă to that of SNCFR and SAF, like the unionists told us, because we are talking about assets, not shares".

Economic analyst Cristina Chiriac says that the only manner to convert the debts of a company into shares is to conduct a share capital increase, and he went on to say: "We have had another attempt in Romania to convert debts into stock, in the case of Oltchim which had unpaid debts towards the former AVAS and Electrica, through a share capital increase, a procedure which was, however, not completed, due to it being considered a state aid and the decision of the Ministry of the Economy".

As for the price which the Government is asking for half of CFR Marfă, Cristina Chiriac told us: "The key element in a privatization is the evaluation report. Through this report, the value of the company at a certain date is determined, not at a future time - in the current case, prior to the making of the announcement concerning the privatization of CFR Marfă. The value of a share is determined based on the assets and debts of the company. Therefore any change in its patrimony (whether we are talking about assets or shares) which occurs after the price per share is inopportune, as it can lead to loss of investor confidence".

Relu Fenechiu also claims that after the state-owned company was put up for privatization the first time, the ministry received several requests for the extension of the delays and for the loosening of some o the requirements.

"We resumed the privatization under different terms. So, we have resumed the process, we did not change the rules. Upon that resumption of the privatization, all of the firms which were interested could participate. I want to mention that the requests for the loosening of the terms came precisely from OmniTRAX and Transferoviar, because GFR met the turnover requirements from the very beginning", Relu Fenechiu told us.

Transferoviar Grup and Donau Finanz GMBH & Co KG yesterday announced that they were withdrawing from the privatization of CFR Marfă and that they reserve the right to challenge the procedure with the habilitated institutions.

The press release of Transferoviar Grup mentions: "The association made up of Transferoviar Grup and Donau Finanz has mobilized major human and financial resources, domestic (management and execution personnel), as well as external (consultants, lawyers), to meet the deadlines set by the Ministry of Transports, in its role of public institution involved in the privatization process.

Considering the complexity of the process and the significant volume of information that needed to be reviewed for making our evaluation of CFR Marfă in an adequate manner, we have filed several requests for the extension of the deadline with the Ministry of Transports. These requests were rejected, in spite of the European standards on privatizations, which require an allowance of at least two months for investors to conduct their own evaluation (the data chamber could only be accessed starting with May 27th, 2013)".

The officials of the company stressed that they would begin to review the legal alternatives available for defending their economic interests in Romania.

Sources close to the deal told us that the real reason that Transferoviar Grup withdrew from this procedure was that they failed to obtain the letter of guarantee from the bank.

Grup Feroviar Român yesterday submitted the binding offer for the acquisition of the majority stake in CFR Marfă, according to the Minister of Transports. The envelope with the documents is set to be opened today and the winner of the call for tenders to be announced.

GFR has the 180 million Euros for the acquisition of CFR Marfă out of its own sources and from a syndicated loan. The company has received letters of good standing and guarantee from Raiffeisen Bank Austria, according to the officials of the company.

After the privatization of the state-owned company was restarted (all the investors failed the pre-qualification round on the first attempt), OmniTRAX, GFR and the consortium made up of Transferoviar Grup and Donau Finanz bought tender books, with the latter two participants making the shortlist.

After being disqualified for not submitting all of the qualification documents, OmniTRAX has challenged the process.

The privatization of CFR Marfă was agreed by the Romanian authorities with the representatives of the delegation of the IMF.