GRUIA STOICA, GRAMPET GROUP: "We are interested in the privatization of CFR Marfă, but not under any circumstances"

• The government wants approximately 60 million Euros for CFR Marfă, with a participation collateral of 10 million Euros

"Grup Feroviar Român" (GFR) is interested in the privatization of CFR Marfă, according to businessman Gruia Stoica, the owner of Grampet Group, which GFR is a part of.

He said, however, that the involvement of GFR in the privatization process also depends on how that process will go, and he emphasized: "We are interested in the privatization CFR Marfă, but not under any circumstances. It is hard to believe that the Romanian government will completely cancel the debts of CFR Marfă. The involvement of the Grampet - Grup Feroviar Român group of companies in the privatization process will also depend on the evolutions of this approach".

Gruia Stoica also considers that the mission of the Ministry of Transports is to draw up an integrated strategy for all transport sectors.

The businessman said: "Even though we understand that the attention will be focused on the privatization of CFR Marfă, we believe that the mission of the Ministry of Transports and of those in this ministry is to draw up an integrated strategy for all the transport sectors, which would benefit the entire company and the country's budget. Our opinion is that a national strategy for transports is needed, with implications on a national, regional and European level. This is the mission of those who lead the ministry, not to keep track of each individual company".

The Minister of Transports recently announced, after a brief discussion with the representatives of the IMF, that the privatization of CFR represents a priority of his term, after stating, just a few days ago, that he does not intend to put the railroad operator up for sale.

The executive estimates that following the sale of a 51% stake in the state owned company, it will earn 268,752,103 lei (a little over 60 million Euros), which will go to the state treasury, according to the draft budget of the Ministry of Transports, concerning the privatization activities for 2013. The previous governments were hoping to earn at least 1 billion Euros for CFR Marfă (the privatization intention has been announced since 2004, and since then several privatization strategies have been devised).

The current privatization strategy of CFR Marfă states that the collateral for participating in the call for bids will be the equivalent in lei of the amount of 10 million Euros, representing 17% of the face value of the stock owned by the state. The amount of the fee for participating in the call for bids is the equivalent in lei of the amount of 20,000 Euros. The sale process will only be done through a negotiation based on preliminary and non-binding offers, followed by a sealed-envelope bidding. The only criterion for winning will be the bidding price.

The strategy also states that the option of debt-to-equity conversion has also been taken under consideration for CFR Marfă. A potential conversion of the company's debts to the state budget has been included in the procedure for the pre-notification of the conversion with the European Commission.

The privatization process can be conducted in parallel with the procedure to notify the conversion to the European Commission, as the approval of the European Commission is needed before the actual implementation of the conversion of the company's debts into stock.

The privatization strategy also provides: "As a stage in the privatization schedule, in order to speed up its schedule as much as possible, in order to meet the requirements of the Ministry of Transports and the deadlines discussed with the International Monetary Fund and the European Commission, the conversion stage can be implemented even in the final phase of the privatization process, and after the signing of the contract for the sale of the shares with the winning bidder, but at any rate, before the completion of the deal based on the sale contract, and after obtaining the approval of the European Commission in that regard".

In mid-2012, the debts of "CFR Marfă" to the state budget and the social security budget increased to 755 million lei.

"CFR Marfă" has a fleet of rolling stock of over 39,000 cars (of which only approximately 23,000 are frequently used) and over 900 locomotives.

GFR is the second largest Romanian railroad freight operator, after state owned CFR Marfă. In 2011, it had a turnover of approximately 761 million lei and a profit of almost 29 million lei, according to data on the website of the Ministry of Public Finance (MFP)

Operating in all the areas connected to railroad transport, such as railroad freight, maintenance and rental of the component production, freight car transshipment, logistics services, IT solutions specific to the railroad segment, the Grampet Group, 100% domestically held, operates on the Pan-European transport corridors and in South-East Europe, expanding to the countries neighboring Romania.