THE EMPLOYEES OF MIC.RO HAVE BEEN INSTRUCTED NOT TO MAKE ANY STATEMENTS, BUT THEIR FACES BETRAY THEIR CONCERN Coface: The state of the balance sheet of "Mic.ro" suggests is an argument against extending commercial credit to the company

• "Mic.ro", "Mercadia" and "Minimax", have borrowed over 45 million Euros from banks

• The "Mic.ro" stores have more clerks than varieties of products

• The company's suppliers, grouped into associations, demand the insolvency of the company

• "Mic.ro" may be acquired by "7 Eleven"

The controversial business "Mic.ro", controlled by magnate Dinu Patriciu, seems to be nearing its end - shuttered stores, and empty shelves in the "groceries" which haven't yet displayed the "CLOSED" sign, salespersons whose faces betray concern, in spite of their attempts at sounding optimistic. This entire situation is surrounded by rumors which have appeared in the press, which claim that "Mic.ro" is bankrupt and it will be sold to a major investor. We were unfortunately unable to obtain confirmation of these rumors, which we found out from various market sources. It is obvious that Dinu Patriciu has trained his subordinates well. All of them are saying that "they know nothing" about the very business that they work for, or refuse to "comment" on this matter. It was no surprise to us that yesterday, the people who handle the company's PR did not respond to our inquiries on the status of the store chain, because they never answered any of our inquiries concerning "Mic.ro" before.

Nevertheless, a statement made by Dinu Patriciu appeared in the media a few days ago, in which he said that he would refinance this business "by himself".

• "Mic.ro" may be acquired by "7 Eleven"

Two years and three months ago, Dinu Patriciu was planning to destroy hypermarkets with his chain of stores "Mic.ro", launched at the time (October 2010). He is now negotiating the sale of his grocery stores or the association with the international group "7 Eleven", according to various sources from the retail market, quoted by Mediafax. Negotiations began in autumn last year, and their deadline has been set for March 2012, the quoted sources say, who mentioned that a capital injection of 60 million Euros in the "Mic.ro" network is being negotiated.

These negotiations are taking place as the suppliers of the store chain are requesting the insolvency of "Mic.ro". The fact that "Mic.ro" hasn't paid off its debts to various suppliers in more than six months, has caused many of them to stop their deliveries of merchandise and to band together in associations, requesting the insolvency of "Mic.ro".

Carmen Creţu, a lawyer at "Coltuc şi Asociaţii", a company which represents one of the creditor associations in question, said: "There are numerous suppliers which haven't been paid by «Mic.ro». It is actually very hard for them to get their money back, because the representatives of «Mic.ro» are no longer answering their phones. They paid for the merchandise at first, but starting with April-August 2011 they have stopped paying. Those who have requested the insolvency of the companies in question got some of their money back, but only up to 40,000 lei, which was enough to prevent them from being declared insolvent. We do not want the companies of Dinu Patriciu to be declared insolvent, so we can recover our money. Otherwise, it will be very difficult to get paid, especially since most of the suppliers are unsecured creditors".

• "Coface" România: "Mic.ro" has been developed using the money of the creditors and suppliers

A few days ago, in a press conference, the representatives of "Coface" Romania said that "Mic.ro" "most certainly" developed using the money of the creditors and suppliers: "It was to be expected this would happen, especially since they have never honored their commitments. We have no way of knowing what their strategy will be, but we all know stores have been shut down, we know there have been payment delays, we know from several suppliers located in several regions that the payments were made after more than 240 days, which is a lot of time for the food market". Cristian Ionescu, the head of "Coface" Romania, said: "The suppliers called us and told us that the arrangement they had with them (ed. note: the representatives of «Mic.ro») was along the lines of «If you don't keep giving us merchandise, we won't have the money to pay you back». (...) This company most certainly developed using the suppliers' money. The money of the shareholders in this company doens't exist, their equity is deeply negative. Everything the developers did they did was done using the creditors' or suppliers' money".

He said that the balance sheet of "Mic.ro" is an argument against extending commercial credit to the company. Nevertheless, over the past year and a half, the store chains owned by Dinu Patriciu - "Mic.ro" and "miniMax", which was turned into Mac.ro - have borrowed over 45 million Euros from several banks: BCR, "Unicredit Ţiriac Bank", BRD and "Raiffeisen Bank".

"Mic.Ro" posted losses of more than 50 million lei, in the first year of operation (2010), according to informaton published on the website of the Ministry of Public Finance (MFP). In 2010, "the grocery on the corner" - which is what Dinu Patriciu called his business - had a turnover of approximately 51 million lei in 2010, and almost 160 million lei in debts.

• The mobile "Mic.ro" stores have disappeared as well

The "Mic.ro" mobile store business hasn't achieved its goals either. Out of over 100 mobile stores, most of them have been removed from the streets lately. In September 2011, Dinu Patriciu owned about 830 "Mic.ro" stores, of which 720 were fixed and 110 were mobile. At the time, the businessman was announcing that the expansion plans provided for 2,000 units fixed "Mic.ro" stores and 750 mobiles "Mic.ro" stores, by the end of 2012: "We are trying to develop some traditional stores, with grocers and apprentices, a small store that would become the center of a community. The idea was to place such stores every 800 meters in the urban area, and in Bucharest we are already 25% there".

At the time when this business was launched, Dinu Patriciu claimed that "every 100 stores generate a turnover of approximately 136 million Euros. They are all maturing. After having opened 100 stores, we are actually ahead of the business plan\".

• The young managers of "Mic.ro": "Even though we are upset, we have nothing to comment"

As part of the "Mic.ro" network, the businessman developed a program by which the managers of a unit "became partners" in the chain. They were initially trained in exchange for a fee of 400 Euros, and they then deposited a collateral of 7,000 Euros, they signed a partnership agreement with the shareholders of "Mic.ro and got a fully equipped, stocked and furnished store, and they would then order products based on their sales. The monthly amount promised by Patriciu to each associate was 2,500 Euros and a share of their sales, money which would also be used to pay the wages of the three employees each store had.

The young managers co-opted in this business never received that fee, because they never reached the sales figure they had to in order to do so, the head of one of the "Mic.ro" stores said. This was in fact the only information we were able to get from the three representatives of the retail chain whom we talked to yesterday. With everyone else, the answers to our questions were the same: "We can't comment", "We do not know", "We don't know anything about this", "We are not allowed to talk", "Please leave", "We've had enough of the rubbish in the press, we only believe what they tell us at headquarters", "The situation is uncertain to us as well", "We were instructed not to comment", " Even though we are upset, we have nothing to comment".

In any case, in our tour through the "Mic.ro" stores - the ones that were still open -, we saw more salespeople than types of products. Pepper, pasta, CD-s and a few bottles of drinks lay strewed across the mostly empty shelves.

All of the employees that we talked to told us that "Mic.ro" was in the process of reorganization, and that it was not bankrupt.

When asked about how sales were doing, one of the young men, who was anxious about having someone enter the store said: "How can we sell anything when all we have are spices?"

Another question which seemed to trouble the sales clerks was the one concerning their salaries: "there are rumors you haven't received your salaries. Is it true?" The answers varied: "Maybe...", "We've had no problems, for our part", "I think we are getting enough for what we are doing". Their faces however, seemed to tell a different story...