How SIF Oltenia rids itself of the bankrupt companies it has in its portfolio

With its portfolio burdened by several companies which have been barely dodging liquidation for years, financial investment company "Oltenia" (SIF5) has been trying hard to sell them.

This is the case of the stake that the FIC held in carmaker "Aro" Câmpulung, a company that went bankrupt even as far as three years ago and the assets of which it tried to auction off several times, and still failed to cover all of the company"s debts which cover 95 million lei. At the end of last month, the FIC announced that the FIC intended to try to sell a 20% stake in the former off-road car maker for six million lei, hoping to sell the shares for a price equal to the face value of 2.5 lei. However, things didn"t go exactly as planned, and in October SIF 5 sold its stake in "Aro", for a "rather small amount, far below the amount which would require reporting on the Bucharest Stock Exchange", which was the reason why the company did not report the sale, according to officials of SIF5.

The surprise however comes when we find out who the buyer of the 20% stake in "Aro" Câmpulung is. Apparently it is SIF "Oltenia" itself. Or more specifically, the company which bought the shares of that SIF5 owned in "Aro" is "Voltalim" Craiova, in which SIF "Oltenia" owns 99%.

Florian Buzatu, member on the Board of SIF5 and executive manager of the company explained why SIF "Oltenia" decided to transfer its stake in "Aro" to another company: "SIF Oltenia needs to have a clean portfolio. If we were supposed to make a consolidated audit for all the companies in our portfolio, like we get asked all the time to do by the National Securities Commission, that stake would actually appear like an unprofitable investment. Suppose we"d have an investor come to us and ask us how many companies we have in our portfolio, and we"d tell them we have 124. That number would be inaccurate, because out of those 124 companies, 10 are insolvent. We automatically received these companies when the FICs were incorporated, We did not ask for them, some were privatized through the MEBO method and in some cases we remained captive shareholders, with stakes of a few percent. In the case of Aro, we decided to no longer wait for the final decision to wind up the company because we thought it was better to actually make some money for our stake instead of have it become worthless".

Mr. Buzatu did not mentioned the exact amount that "Voltalim" paid for the 20% stake that SIF "Oltenia" had in "Aro" Câmpulung, even though the local press suggested the amount of EUR 56,000.

Mr. Buzatu told us that SIF5 used the Voltalim "method" in the case of other bankrupt companies that it wanted to rid itself of, but said that there were similar auctions where there were other bidders, which were interested by the low prices at which SIF5 was willing to sell its stakes in the deadweight companies it had in its portfolio.