English
• Minister Lucian Isar: "Technically speaking, the privatization of Hidroelectrica still stands"
• Even if the request for insolvency were to be denied, the entire schedule of IPOs and SPOs is already being affected
The filing for insolvency "Hidroelectrica" is extremely bad for investors, as it comes in the midst of the government's program to privatize state-owned companies through the stock market.
The messages of credibility and predictability sent to investors during the road-shows conducted abroad went out the window on Monday, after the press announced that Hidroelectrica had filed for insolvency on Friday.
Even though an increasing number of voices say that the listing of "Hidroelectrica" has become impossible for a while, due to the requirements for going public, as well as due to the blow deal to the investors' confidence, the delegated minister for the business environment, Lucian Isar yesterday said that, technically, the privatization of "Hidroelectrica" still stands, as the filing for insolvency is just a legal proceeding.
As per the agreement with the IMF, the privatization of "Hidroelectrica" will be made through the listing on the stock exchange.
Therefore, the statements of minister Isar could either mean that he has called it quits on the listing, or that he doesn't know the rules of the Stock Exchange.
According to its own rules (the Code of the BSE), the latter can not accept the listing of companies which are insolvent, according to qualified sources, as well as to the opinion of lawyers in the field.
On the contrary, situations of bankruptcy or dissolution lead to delisting.
In May, Lucian Isar the appointed minister of the Economy and Business Environment, once again reaffirmed the commitment of the Romanian government to honor the privatization program and to do everything in its power to meet the deadlines for privatization.
Following the visit to London, Lucian Anghel, the president of the Bucharest Stock Exchange, was convinced that everything that was within the power of the state would get done, meaning that, if there were any delay (ed. note: when it comes to the privatization schedule) it would be recouped. Mr. Anghel said: "When it comes to investors, it is essential for Romania to honor this message conveyed by Minister Lucian Isar, because credibility is hard to build and very easy to lose. If you are not credible, investors won't want to meet with you. What is very important is the reaffirmation of the commitment to Romgaz and Hidroelectrica".
Now, the representatives of the Bucharest Stock Exchange were left speechless when it comes to the situation of "Hidroelectrica", saying that they are waiting for more details.
Even if, in today's hearing, the Court were to deny the insolvency of "Hidroelectrica", several voices warned that this would set a dangerous precedent, which concerns all the offers of the state scheduled for this year.
"A listing by the end of the year, no longer looks possible at the moment", the president of the OPSPI, Remus Vulpescu, said yesterday.
He said that the privatization plan needs to be understood by looking at it from the angle of the goals of the privatization, which concern first of all the introduction private management mechanisms, through the private shareholders, which would allow those companies to operate effectively and competitively: "Thus the first goal of the privatization is to make the state-owned companies more efficient. The second is the incentivization and the involvement of the private investors in the national economy, and the third concerns obtaining money in exchange for the shares sold by the state, having an alternative privatization mechanism which was being considered in the case of Hidroelectrica, namely the share capital increase".
Remus Vulpescu announced that the privatization process would continue: "It has not been ruled out nor excluded, nor did we abandon the idea of increasing the share capital or selling some of the shares owned by the state, if the goals of the operation will still be valid at that time and they will prove useful to us".
Cristian Ionescu, the head of Coface Romania, yesterday said that he doesn't believe that "Hidroelectrica" can still be taken public, because it is hard to market as the stock market is still under pressure from the international context.
• The risky bet
The process for the insolvency of Hidroelectrica was allegedly planned in great secrecy by Prime Minister Victor Ponta and by the head of the OPSPI Remus Vulpescu, to the smallest details, energy market sources claim. The two officials allegedly made sure that the filing for insolvency would be approved by the Court of Bucharest today, our sources also say. Thus the head of the Government made sure that the receiver and the bankruptcy judge would not mess up its plans to get rid of the contracts with "the clever boys" in the energy sector with the various reorganization solutions.
The stake of the insolvency of Hidroelectrica would be, according to our sources, the gaining of a huge image capital for the autumn elections, by being able to boast the cancellation of the famous direct contracts.
This theory, concerning the stake of the insolvency of Hidroelectrica SA, which was making the rounds on the halls of the FOREN regional energy forums, gained more credibility at noon, after the conference held by Remus Vulpescu, who is also the president of the Board of Directors of the company. He started his speech on a strong note, saying that it will be up to the court and the receiver to decide the course of the insolvency, and that that is not the concern of the Board of Directors of the Ministry of the Economy. The head of the OPSPI then went on to say that the insolvency is needed because of the disastrous management of the company and the lack of liquidity, and added that the receiver can make any decision when it comes to the restructuring, starting with the contracts with the current employees.
Remus Vulpescu then went on to say that the newspapers and the television stations were just talking nonsense yesterday and that the insolvency has nothing to do with the contracts with the so-called "clever boys", but that the restructuring will not involve the piecemeal sale of the assets of the company for a dime. How exactly does the head of the OPSPI know what decisions the court-appointed receiver or the creditors will make?
Did he make a mistake or did he just give us a tip, exasperated as he was by the questions addressed by journalists?
Assuming the intention of the authorities was merely to cancel the extremely harmful contracts concluded by Hidroelectrica, Prime Minister's Ponta gamble with insolvency is still risky.
The restructuring process of Hidroelectrica will remain at the latitude of the creditors (mostly banks) and of the court appointed receiver, which aren't energy specialists and which could decide to sell off the company's assets, which would be more adequate for a shoe-making factory, but not for a company of strategic importance. (ALINA TOMA VEREHA)
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