THE FINAL BIDS ARE BEING SUBMITTED TODAY OPSPI: "The privatization of Oltchim, threatened by a lawsuit filed by Dan Diaconescu"

The privatization of Oltchim is placed in jeopardy by a lawsuit filed by Dan Diaconescu, said Remus Vulpescu, the head of the OPSPI.

Dan Diaconescu challenged in court the decision of the General Meeting of the Shareholders of Oltchim concerning the updating of the amount of the receivable of the AVAS as well as the interest it had accrued by the date of its sale.

In the beginning of last week, Dan Diaconescu told BURSA that he would seek to block the decisions of the General Shareholder Meetings of Oltchim.

Mr. Vulpescu said: "I don't understand what harm Oltchim caused to Mr. Diaconescu which was so grievous that he had to file a lawsuit against the company, just as it is beginning its privatization. The OPSPI is now in the situation of selling a receivable which is the object of a lawsuit. In such a situation, the proceeds from the sale of that receivable can only be a lot smaller than what they would normally be due to that lawsuit".

When asked whether the sale of the AVAS receivable can still take place given this lawsuit, the head of the OPSPI replied that he is not certain that the sale will succeed.

According to Vulpescu, by Sunday night, Dan Diaconescu had not submitted the final bid for the privatization of Oltchim. The deadline expires today at 12:00. "If he participates in the privatization, the lawsuit filed by Dan Diaconescu could skew the competition between the bidders", the head of the OPSPI said in closing.

• The OPSPI expects three competitors for Oltchim

The head of the Office For The State's Interests and Industrial Privatization (OPSPI), Remus Vulpescu, expects to receive by 12:00 today, three firm bids for the privatization of Oltchim Râmnicu Vâlcea.

The statements were made on Friday afternoon, before the information about the lawsuit filed by Dan Diaconescu appeared.

Mr. Vulpescu said on Friday that he does not rule out and wants a participation of a big Russian company affiliated with Gazprom.

When asked whether he had received any firm bids by Friday, Remus Vulpescu said that he did, but he declined to say whether it was one or several.

Last week, the BURSA newspaper exclusively announced that German company PCC, "Petrochemical Holding" Austria - the owner of RAFO Oneşti, and AISA, the company of businessman Ştefan Vuza, were interested in buying presentation folders to participate in the privatization of "Oltchim", according to sources close to the situation. Besides those companies, journalist Dan Diaconescu expressed his intention to buy "Oltchim".

The bids received by today at noon will be opened tomorrow, when the open outcry auction will be held as well.

By Friday, the tender book for the privatization of Oltchim had been bought by 13 investors, according to the statements of the Government officials.

About two weeks ago, the Government changed the strategy for the privatization of Oltchim, through the sale of the block of shares owned by the state, respectively 54.6% of the share capital, and the receivables of the Authority for State Assets Recovery (AVAS) and Electrica SA, representing 1.8 billion lei, or 56% of the company's total debt.

Remus Borza, the receiver of Hidroelectrica, believes that the political influence on state owned companies makes privatization the only solution for their restructuring and streamlining: "Capable managers will face problems such as the leeching of the companies and disadvantageous contracts which are not easily shaken off. The insolvency provides the instruments needed for the purification of state owned companies. The future owner of Oltchim will have no other option either but to declare it insolvent to get rid of its debts and toxic assets and to be able to restructure it".

Mr. Borza estimates that the privatization of the majority stakes must not involve the companies which the state views as strategic.

Lawyer Gheorghe Piperea said last week: "Oltchim can and must be a valuable company of our industry. But privatizing Oltchim now, in its current state, is a fantasy. On the other hand, privatizing Oltchim after having cancelled the company's historic debts towards the AVAS in part or in full can be achieved. Except that the cancellation of those debts can only be achieved through judicial reorganization or bankruptcy".

He said that, the moment the state abandoned the idea of converting the debt of Oltchim into equity, the same operation would no longer be possible once a third party will have acquired the receivable of the AVAS or of Electrica. "On the other hand, if the privatization fails, (in which case the receivables of the AVAS and of Electrica would remain where they are), the wiping of those debts would only be possible through insolvency. A suggestion for the decision makers: according to the law of the European Union, canceling a public debt through the reorganization plan or through the liquidation which follows bankruptcy is not considered state aid", lawyer Piperea said.

The employees of Oltchim Râmnicu Vâlcea have suspended the protests on Friday night, and the employees who are on hunger strike will also abandon that form of protest, awaiting the outcome of the discussions which a delegation of the employees would have today with the minister of the Economy, Daniel Chiţoiu.

Several hundred employees of Oltchim protested throughout last week in front of the administrative wing of the company, asking for their overdue wages for the last two months, securing the funds needed for restarting the plant's installations and the payment of the debts to Electrica and the resignation of union leader Mihai Diculoiu. 15 employees went on hunger strike.

According to the latest data, the shareholder structure of Oltchim includes German company PCC SE (18.32%) and investment fund Carlson Ventures, registered in Great Britain, which owns 14.02% of the shares through Nachbar Services.

The privatization of Oltchim represents one of the conditions for the approval by the board of directors of the IMF of the sixth assessment of the agreement with Romania.