Vosganian: "The banks don't want to finance Oltchim anymore"

The problem of Oltchim is about to blow up in the face of the authorities, which have achieved no results with their plan to resume operation of the plant - obtaining a loan of at least 10 million Euros from the creditor banks and obtaining the approval of the European Commission for the granting of a bailout package of about 20 million Euros.

Varujan Vosganian, the minister of the Economy, yesterday said, for BURSA: "The creditor banks don't want to come up with further financing for Oltchim. BCR has exceeded its exposure to Oltchim, and if CEC were to grant it this financing, it would be considered a state aid. Traders want to continue to work with Oltchim, but they don't want to make any advance payments. We need to come up with another financing solution for Oltchim: we're talking about factoring".

The factoring contract is a commercial loan contract, which involves a specialized lender (a banking company or a specialized financial institution) in collecting invoices and a trading company which provides products or services. The supplier is looking to collect its invoices before maturity, and the factor (the company specializing in collecting invoices) is looking to make a profit, usually a certain percentage of the invoices it settles in advance.

Minister Vosganian said that technically, the European Commission gave him little hope that it would approve the state aid for Oltchim: "The technicians of the Commission consider that the AVAS and Electrica did not simply act like a regular creditor and that they have granted Oltchim a state aid. We are going to continue our talks".

Sources close to those talks in Brussels claim that the representatives of the Commission have asked the authorities to come up with a business plan for Oltchim which would prove that the contribution of capital from the state would lead to the turnaround of the plant and that the state would recoup this money. The same sources say that the representatives of the European Commission did not receive this information from the Ministry of the Economy.

Varujan Vosganian said that the people of the Commission did not request a plan for making the plant more efficient and the problem is that the AVAS and Electrica SA (which have lent 450 million Euros to Oltchim) did not pass the test of the private investor.

About 1,000 employees have been protesting violently for three days accusing the authorities and the plant's receivers for not coming up with concrete solutions for the plant of Vâlcea. They are asking for the payment of the overdue wages, the payment of compensatory packages in the event of layoffs and they want to know whether there is any chance of Oltchim becoming functional again.

The minister of the economy, Varujan Vosganian, yesterday said: "We need money for electricity, for utilities, that is what we are trying to do now, but perhaps some of the union leaders - who are insistently asking for the return of Mr. Constantin Roibu (the former general manager), that should also show you what's behind these protests - they probably want to perpetuate a situation like that, which is not conducive to dialog. Even so, we will maintain the dialogue, tomorrow (today) we will present their program, which I hope will help maintain a work capability of more than 50%, meaning a new doubling of the capacity".

The officials of the Ministry of the Economy are saying that the IMF has bluntly told them that Oltchim needs to be shut down, and the European Commission has said that this plant is a black hole which the state should not invest any more in. "The European Commission has told us that Oltchim has a negative history the likes of which it has never seen in a debate concerning state aids", he said.

The minister of the Economy repeatedly said that it is so adamant about saving what can still be saved of Oltchim because liquidating the plant would cost more than the efforts to restructure and preserve some jobs. According to the Ministry of the Economy, the economy of two counties and many companies such as CET Govora, The Govora Soda Ash plant and Salrom depend on the fate of Oltchim. Closing down the plant also involves the assuming of costly obligations for environmental cleanup, which can not be covered through the sale of assets (some studies indicate that the earnings from dismantling the plant and selling it from scrap would range between 60 and 80 million Euros).

Yesterday, Gheorghe Piperea, one of the receivers of Oltchim, said that if the protesters will not leave the streets, then the company will no longer produce anything and it will also not be able to repay its suppliers. Oltchim needs to pay its suppliers immediately, or else it will stop functioning starting Monday. He also said that if people get back to work, the plant will get a breather, during which time the reorganization plan can be implemented.