Oltchim Back In Black In October, Management Says

• PCC: Arpechim acquisition will drive Oltchim bankruptcy

Constantin Roibu, the General Manager of Oltchim - Ramnicu Valcea (BSE:OLT) believes that the PVC manufacturer will start making a profit in the second half of October, immediately after the acquisition of the petrochemical division of Arpechim. "We are currently having talks with Petrom about the acquisition of the petrochemical division of Arpechim, not the refinery, too, as rumours say," Roibu told BURSA. He added that he expected Oltchim to start making a profit in the last two months of the year. However, the final results for the entire year would still be negative because "we cannot recover the losses incurred in the first three quarters of the year in three months," he said.

In turn, the German-based PCC SE, a significant shareholder in Oltchim, believe that the petrochemical arm of Arpechim requires major investments that can only generate a profit after 3-5 years, by which time Oltchim will be bankrupt because of the losses generated by heavy indebtedness. "The acquisition of the refinery from Arpechim is economically unwarranted and is jeopardizing the operations of Oltchim," as immediate investments could amount to 2.5 billion EUR, "Adam Lamentowicz, Development Manager of PCC SE, said on Friday. He believes that investment of such proportion exceed Oltchim"s capabilities and may drive the company bankrupt.

PCC also believe that Oltchim"s current plan to focus on PVC production does not have chances to succeed, because the plant has a small production capacity that cannot ensure optimal margins. In PCC"s view, Oltchim should focus on niche products. "For instance, the Rochita plant in Poland, which we acquired in 2002, started with a limited portfolio of only 40 products and has grown to over 400 products derived from petrochemical products, all produced in small quantities," Lamentowicz added. Approximately 30 chemical plants of small capacity, similar to Oltchim, exist in Europe and all of them are in difficulty. Some of them have recently been closed.

• PCC contests State aid for Oltchim

PCC, the largest minority shareholder in Oltchim, has notified the Competition Council, the Ministry of Economy, the Ministry of Finance and EximBank that the actions taken towards granting State aid to Oltchim - Ramnicu Valcea constitute a breach of EU laws. In PCC"s opinion, the reorganization plan is jeopardizing the company, which is already in a critical situation.

"We are requesting the suspension of any actions towards granting State aid, including any debt-for-shares swap, State guarantees or any form of State aid, until the European Commission agrees with such actions. If the measures related to the 486 million EUR worth of State aid are not duly notified as aid for reorganization, as per the EC regulations on companies in difficulty before July 2008, we will contest the decisions of the Romanian State in court," PCC representatives added.

• PCC starts losing patience with Oltchim

PCC is still interested in the privatization of the petrochemical plant in Ramnicu Valcea, but are not sure what to do if Oltchim buys the petrochemical division of Arpechim. "If Oltchim acquires Arpechim, I do not think that the company will still be interesting to us," Lamentowicz said. "We have been waiting for two and a half years for the privatization process to start and we have already wasted too much time. We have received several offers to participate in other privatization processes and we cannot keep our liquidities in the bank forever after having sold the logistic division, because we are not a savings fund," he added.

PCC is the largest minority shareholder in Oltchim - Ramnicu Valcea with 12.89%. The Ministry of Economy controls the company with 53.26%.