THE GOVERNMENT TRIES AGAIN Will we have a short list for the privatization of CFR Marfă?

In a case of "Let's give it another shot", the authorities are once again on the day when they are expecting prequalifying offers from investors interested in buying CFR Marfă. More than that, given the fact that they have established certain deadlines for this privatization, the short list with the potential buyers will also be drawn up today.

This means that in just half a day, the privatization commission will have to assess all the offers, whereas on the first attempt, the authorities have set aside one week for drawing up the short list.

What everyone is wondering is whether if, this time, there will be a short list...

One week ago, the attempt to sell 51% of the shares of the shares of the Romanian freight railroad operator, failed in its first stage. More specifically, none of the three bidders qualified in the race for the privatization of CFR Marfă, as the government immediately put the company up for privatization again.

The pre-qualifying offers have been submitted by American company OmniTRAX (about which it was written that it may have ties to businessman Cristian Burci), Grup Feroviar Român - GFR - (which belongs to the Grampet, owned by Gruia Stoica) and the association between Transferoviar Grup (which is owned by Călin Mitică) and investment fund Donau-Finanz GmbH & Co KG Austria.

TTS group had also bought the tender book, but it did not send documents for prequalification.

• Government members still optimistic

By yesterday afternoon, three tender books had been acquired for the privatization of CFR Marfă, according to minister of Transports, Relu Fenechiu, who said: "There are three companies that have acquired the tender book. (...) Generally, the bids are submitted on the last day and generally in the last hours".

"The situation of the company isn't exactly great, given the debts it has today", the minister said, quoted by Mediafax.

According to the official, the debts of CFR Marfă towards the suppliers are about 400 million lei. The arrears of the company to the state budget are about 1.5 billion lei, debts which will be cancelled, if the company gets privatized, according to Relu Fenechiu.

In Tuesday's government meeting, prime-minister Victor Ponta said he was "moderately optimistic" concerning the resumption of the privatization procedure with CFR Marfă, while the minister of transports considers that the final deadline of the privatization, of June 20th, will be honored.

The minister gave assurance that he has worked until night time, if needed: "Thursday (ed. note: today), we will go through three deadlines: filing the bids, the preliminary analysis and the establishing of the short list. The commission will work until midnight, if needed, so that the procedure is completed by Monday. We want and hope we can succeed that by the final deadline of June 20th, will be met, even though these delays weren't our fault".

The new privatization schedule stipulates that potential buyers must submit the pre-qualifying documents until today as the opening will be announced today around 14:00. The bidders included in the short list will submit, by June 5th, the preliminary and non-binding bid, and the privatization commission will negotiate with each of them starting on June 6th.

In order to participate in the sealed-envelope bid, the potential buyers must submit, by June 19th at the latest, the participation documents which were not requested in the pre-qualifying stage, the sealed-envelope bid and the proof of paying the participation fee.

The deadline for opening the bids and the announcement of the winner is still June 20.

• Fenechiu: "The ministry has relaxed the requirements because none of the three investors present in the initial stage met the requirements"

The new privatization announcement involves far more relaxed terms than those of the initial announcement.

Relu Fenechiu said that the ministry has relaxed the requirements because none of the three investors present in the initial stage met the requirements.

"There is a relaxation of some requirements that have no implications on the price at which the company will be acquired nor on our certainty about the reliability of the companies that will participate in this call for tenders", the minister said.

Some of the requirements which were relaxed include the turnover requirement for investors, which was reduced five times.

Thus, the participants in the call for tenders (individuals, companies or consortiums) were initially required to have an annual turnover of 100 million Euros over the last three years, and in the case of partnerships, each of its members was required to have an average annual revenue of 30 million Euros over the last three years.

According to the new announcement, the average turnover requirement for the participants has been cut to 20 million Euros, and this revenue can be their own or combined with the revenue of the entities controlled by them, a provision which did not appear in the first announcement.

The provision according to which every member of a partnership was required to have a turnover of 30 million Euros has been removed permanently from the announcement.

Also, while the initial announcement required participants, as an alternative to having a turnover of 100 million Euros, to have under management assets of at least 300 million Euros, over the last three fiscal years, this condition has now been eliminated.

Among others, the participants in the privatization of CFR Marfă are being asked for letters of good standing, while in the first announcement they were required to produce letters of comfort.

Letters of good standing comprise general interest information and data concerning the financial performances, and do not represent a commitment from the bank to grant further loans or for further commitment. On the other hand, the letter of comfort is a document issued by the bank which certifies the existence and the availability of the funds needed for concluding a commercial contract/trade, as well as the commitment of the bank to avail those funds under certain circumstances, and is issued prior to the conclusion of financial or commercial transactions and facilitating the conclusion of the deal in question.

On the other hand, the starting price of the call for bids has been kept at about 780 million lei, the price of the participating brief is still 10,000 Euros, the fee for participating in the call for tenders is still 20,000 Euros and the participation collateral is still 10 million Euros.