China's CEFC extends deadline for taking over Romanian refinery

By bne IntelliNews September 26, 2016

China Energy Company Limited (CEFC) has extended the deadline for the takeover of KazMunaiGaz International (KMGI), the owner of Romania’s largest refinery, Petromidia, by a few months, KMGI senior vice president Azamat Zhangulov said on September 26, according to local media.

The transaction was scheduled to be completed in October. Earlier this month, Zhangulov told Romanian media that KazMunaiGaz (KMG) was renegotiating some of the terms for the sale of Romanian refinery to CEFC, following the recent asset seizure and investigations launched by Romanian prosecutors.

“The term with CEFC has been extended, as we have to hold new discussions with the government. The agreement with this investor will continue, but we will probably need a few more months to complete the new terms of the agreement,” Zhangulov said, Agerpres news agency reported.

CEFC and the Kazakh company signed an agreement in April which envisaged that the Chinese company, which is involved in the financial, energy and investment industries, would purchase 51% of the KMGI. However, the transaction was put at risk after Romanian prosecutors seized the assets of the refinery and started investigations into alleged losses suffered by the state budget during the privatisation process of Petromida and the conversion of the refinery's debt into bonds.

Zhangulov has suggested there have been changes regarding the price of the transaction, although the Chinese buyer has never said that it would pay less because of the Romanian state's actions, according to previous media reports.

Romanian Energy Minister Vlad Grigorescu told Bursa daily on September 22 that the government is considering extending a memorandum signed with KMGI on the settlement of the $660mn debt owed by KMGI’s Rompetrol Rafinare, the company which operates the refinery, to the state.

The memorandum signed in 2013 between the government and KMGI on the $660mn debt settlement, approved by the government one year later after a failed attempt to have it endorsed by the lawmakers, stipulates firstly the sale of a 26.7% stake in Rompoetrol Rafinare’s to KMGI against $200mn and secondly the setup of a "$1bn investment fund", with a $150mn initial contribution from KMGI.

Zhangulov said KMGI has not received any request from the energy ministry to have the memorandum, which expires at the end of this year, extended.

“The memorandum was signed in February 2013 and has been extended 13 times so far […] We have not received any official request to have it extended, but once we receive it, we will analyse it,” Zhangulov said.

KMGI said in July that together with KMG it had submitted a notice of investment dispute to the Romanian authorities, a first step towards eventual international arbitration. “The arbitration dispute concerns the treatment applied by the Romanian authorities to the investments performed by KMG and KMGI in their Romanian subsidiaries,” KMGI said in a statement at that time.

 

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