Rafo borrows through a newly created LLC

• Refinery officials are negotiating with four foreign banks the EUR 330 million loan, but the granting of the loan is subject to Rafo completing its reorganization • Exiting insolvency was postponed yesterday, and the reorganization procedure will most likely be reviewed again in January

Management of Rafo has begun negotiations with four foreign banks for the taking out of a EUR 330 million loan, but according to sources from inside the company, the banks conditioned the approval of the loan on Rafo exiting the insolvency proceedings.

The shareholders of the refinery were summoned on January 6th, 2010, to approve the pledging of movable and immovable assets to be used as collateral for the EUR 330 million loan.

The loan will be taken out by a newly created company - "Petrochemical Invest" SRL Oneşti. This limited liability company was created about six weeks ago, with a share capital of 200 de lei and has the following shareholder structure. "Petrochemical Holding" Gmbh (95%), and Iakov Goldovskiy (5%).

The notice to shareholders does not include any mention of government guarantee for this loan, even though the Boc government has already approved a memorandum for guaranteeing the up to 80% of the loan through Eximbank. In other words, the Romanian state pledged to pay banks EUR 264 million, if the refinery couldn"t make it"s payments.

Rafo entered reorganization in December 2004, and according to some experts, this procedure was supposed to have ended two years ago.

A new hearing for the review of the case took place yesterday in the Court of Bacău, but no ruling was issued because the Rafo case does not yet have a definitive bankruptcy judge.

Florin Dragomir, the official of Rafo, yesterday said for BURSA, that since the bankruptcy judge assigned to this case retired, the hearing of the Rafo case was postponed twice in a month, and the next hearing will most likely be set for January, which is also when the appointment of a definitive judge in this case is expected to take place.

The completion of the reorganization plan of the company included the conversion of all guaranteed receivables into stock and the settling of all the litigations with the company"s creditors. "Petrochemicals Holding" Austria paid 707.400.000 billion old lei for the rights of the Romanian state back in 2007, and later, in November 2007, the main shareholders approved the increase of the capital by including the claims of the state budget and those of private creditors (1.58 billion lei in total).

The pledges made on the assets of Rafo made by the company"s shareholders were recently deleted from the Electronic Archive for Security Interests in Movable Property, but other securities in order to take out the EUR 330 million loan may only be set up after the refinery exits reorganization.