Romania’s Oltchim petrochemical plant prepares for fresh start

By bne IntelliNews October 1, 2015

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Romania’s Oltchim petrochemical plant, one of the largest chemicals companies in southeast Europe, has the potential for a fresh start after a court rejected objections against its reorganisation plan, enabling trading in the company’s shares to resume on September 30.

Oltchim’s shares gained 15% in the first trading day and another 15% on the second day – though they are still 15-20% below the level before its insolvency. The company’s shares were suspended from trading in January 2013 when it entered insolvency.

The company’s financial situation has recently improved under the special administration of the court-appointed management, and approval of the reorganisation plan by the Pitesti Court of Appeal, over objections from power company Electrica and the Romanian tax collection agency (ANAF),  represents another step forward.

Other creditors of the troubled Romanian chemical plant approved the three-year reorganisation plan in March. Under the plan, the company aims to return to profitability as early as the end of this year. Oltchim already reduced its losses from €46.2mn in 2013 to €9.35mn in 2014.

The management announced an operational profit for the first time in several years in January, when the operating capacity was 30% and sales were €14.3mn. In the first half it made €5.5mn in ebitda, while cutting its overall losses to only €2mn, from €33.5mn in H1 of 2013. The company’s turnover increased by 73% against H1 2013 to €82mn.

The company still employs some 2,200 in the city of Ramnicu Valcea and plays an important role through the raw material it delivers to local companies such as the producers of plastic profile used in construction.

Given the better financial results reported in H1 this year, the reorganisation plan was revised by reducing the job cuts to only 10% of the workforce (225 employees) compared to 500 under a previous version of the plan. The company made redundant 900 of its employees in 2013 when it filed for insolvency.

The main shareholder in Oltchim is the Romanian state, with a 54.8% stake. Another significant shareholder is German group PCC with 32.2%. The company’s free float is 12.85%.

The Romanian authorities have repeatedly attempted to privatise Oltchim but without success. The most recent failure was at the end of last year, when no interested bidders came forward. The company’s creditors asked for €307mn at this last privatisation attempt but its stock market value on the final trading day (January 30, 2013) was only RON105mn (€23.6mn).

The company’s management and the state have therefore been looking for investors interested in the company’s core assets on their own – with no debt attached. 

Three bidders are interested in taking over Oltchim’s core assets, Economy Minister Mihai Tudose told a press conference on May 8. Two of the bidders are from China and the third is from Europe, Tudose added. The three bidders are interested in taking over all the core assets of Oltchim in their current state and their bids would not be conditional upon the purchase of the Arpechim refinery – a scenario that had previously been discussed.

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