EC approves conversion of Romanias Oltchim state debt into equity.

By bne IntelliNews March 9, 2012
The European Commission approved the Romanian government's demand to swap into equity its claims against local petrochemical plant Oltchim, news agency Mediafax reported, quoting the head of the government's privatisation division OPSPI, Florin Vladan, and head of the local antitrust body, Bogdan Chiritoiu, as saying. Following the debt-to-equity conversion, the state stake in Oltchim would rise to above 90% from current 55%. The company's minority shareholders are German PCC SE with 17.5% and UK-registered investment fund Carlson Ventures that owns 14% indirectly through Nachbar Services. The minority shareholders have constantly advocated against a debt-equity swap and against the government's strategic plans for Oltchim. The government decided eventually, after consultations with the IMF, it will try to sell its majority stake in the petrochemical plant. The finance ministry passed a RON 508.6mn claim to the state assets management body AVAS back in 2002, after Oltchim failed to service a state-guaranteed external debt. Later in 2009, Romania asked the EC for permission to swap the claim (specified at that time at EUR 135mn) into equity and also asked for permission to issue new government guarantees to secure a EUR 424mn loan needed by Oltchim in order to boost its activity.

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