Oltchim, in the dark

• Ioan Folescu - "Oltchim owes about 150 million Euros"

• Wojciech Zaremba, the managing director of "PCC" - Privatization is the solution to save the company

The article published on Monday in the BURSA newspaper, which announced that Oltchim had been disconnected by Electrica and that it was functioning barely above the complete shutdown level, raised a commotion in the first hours of yesterday, as the Bucharest Stock Exchange suspended trading in the stock of the plant of Vâlcea in order to confirm the piece of news that we published and to ensure fair treatment for all investors.

The officials of the Bucharest Stock Exchange waited for additional information from the plant, and after a while, the management of "Oltchim" (symbol:OLT) admitted that it was having problems with its electricity providers.

"Starting with January 1st, Oltchim has been operating with part of its installations at a low capacity, as a result of failing to stay within the schedule concluded with electricity provider Electrica", according to a press release sent to the Bucharest Stock Exchange.

The same press release informs that the chemical plant is currently negotiating with Electrica in order to "return the situation to normal and to have the supplying of energy resume according to the contractual clauses".

On the other hand, Ioan Folescu, the general manager of "Electrica" said that there can be no discussion about a negotiation between the electricity provider and Oltchim: "The contractual terms require them to pay, there is nothing to negotiate".

He said that the plant is currently being kept "at the minimum operating level, to avoid further losses".

Mr. Folescu said: "A company of such national importance as Electrica, can not risk becoming insolvent because of a company like Oltchim, which has been living off of us for years. Oltchim owes about 150 million Euros", Mr. Folescu said, who concluded: "We can't hold out much longer ourselves, we don't have any money left!"

Wojciech Zaremba, the managing director of "PCC SE", which owns 15% of the shares of OLT, considers that the only solution to save Oltchim is to privatize it: "Too many problems have accumulated, far too much debt and this is why the company needs restructuring", he said.

Mr. Zaremba said: "A lot of promises are being made and there is a lot of hope that something illusive will happen. Like I have said many times, Oltchim is in a difficult situation and can't survive if it doesn't produce anything".

The threat has been looming for a long time over the plant of Râmnicu Vâlcea, but the decision of disconnecting it from the electricity grid has constantly been postponed, either by political decision, either by invoking other reasons.

• Shares of OLT, 1.2340 lei/share

The major blow that Oltchim was dealt by its electricity provider seems to be reflected to a degree in the evolution of its stock.

Immediately after trading resumed, the shares of OLT rose slightly, but at noon, price fell 2.42%.

Simion Tihon, broker at "Prime Transaction", said that Oltchim is an unusual issuer, which has seen its shares fluctuate in a surprising manner compared to its fundamentals".

The broker considers that the information according to which the plant is operating at low capacity, would normally generate a negative reaction.

Simion Tihon thinks some surprises may occur: "Since the stock of Oltchim has been a speculators' favored by those looking for fast gains, we shouldn't be surprised if the shares of OLT ended the day in the green".

At 16:45 the stock of OLT had a price of 1.2340 lei/share.