The authorities are scrambling to privatize "Oltchim"

• Sources: Shareholders will not be able to block the decision of the European Court

The decision of the European Commission through which, the conversion into stock of the debts of "Oltchim" towards the AVAS was approved last week, will help accelerate the privatization of the plant, according to market sources.

Apparently, a combined sale procedure has been found to help with the privatization of the company.

Thus, a few days from now, the announcement concerning the privatization will be made public, and will remain in the market for 30 days, according to the quoted sources, which claim that the announcement will be atypical, as the interested persons will be able to submit non-binding offers, that is, propose privatization solutions, which will then be reviewed.

The final announcement will be published at the end of April, which will also stay in the market for 30 days and will specify the selected privatization method, the quoted sources told us.

The amendment of the law is also desired, which would mean that the decision of the European Commission would no longer depend on the approval of shareholders, as they would only be allowed to decide whether or not they want to participate in the share capital increase.

In order to be approved, the debt to equity swap needs the vote of 75% of the shareholders of "Oltchim", upon the first hearing of the General Shareholder Meeting.

According to the quoted sources, the general meeting of the shareholders of "Oltchim" will be summoned within the briefest delays.

After almost four years of investigation, the European Commission approved the conversion into shares of the debt which Oltchim owed to the AVAS (ed. note: the Authority for State Assets Recovery).

The debt of "Oltchim" towards the AVAS amounts to 125 million Euros, excluding interest.

In 2002, the AVAS took over from the Ministry of Finance a receivable of 508.6 million lei, originating from the fulfillment of the guarantees issued by the state for the foreign loans taken on by the company.

In July 2009, Romania notified the European authorities about two support measures in favor of "Oltchim".

The first measure involves a conversion of the public debt amounting to approximately 135 million Euros into stock. The second was a state guarantee which covered 80% of a commercial loan worth 424 million Euros, which will be used for the modernization of the company and for subsequent investments.

The decision of the European Commission allows all the shareholders of the chemical plant to participate in the share capital increase of "Oltchim".

Through the Ministry of the Economy, the state owns 54.8% of the shares of the plant.

According to the agreement signed with the IMF, "Oltchim" is one of the eight companies which the state intends to privatize this year.

The shareholder structure of the chemical plant of Vâlcea comprises "PCC SE", which owns 17.47% of the shares, and the investment fund "Carlson Ventures", registered in Great Britain, with 14.02% of the shares, through Nachbar Services.

Russian giant "Gazprom", through "TISE", expressed its interest in buying the majority stake of OLT, in a letter submitted to the Ministry of the Economy in November 2011.

Azeri company "SOCAR" also expressed its interest in acquiring "Oltchim".

"Oltchim" currently has 1.55 billion lei in short term debt and 986 million lei in long term debt.

Part of that debt is owed to "Electrica", which terminated its contract with "Oltchim" in the beginning of this year, as the provision of electricity was taken over by "Electrica Furnizare".

Sources from "Electrica" told us that the total debt of "Oltchim" amounts to 660 million lei (150 million Euros) and so far, the plant of did not pay the overdue amounts, meaning that it failed to honor the payment rescheduling. Also, in order to recoup their loss, the representatives of "Electrica" have asked the Ministry of the Economy to assign the receivable in four equal tranches.

"Oltchim" reported a loss of 270 million lei in 2011, up 20.9% over 2010, even though its turnover rose 17.1%, to 1.53 billion lei.

The company has a share capital of 34.2 million lei, divided into 343.2 million shares, with a face value of 0.1 lei.