Exall owners fail to come up with $25m for Oltchim

One of the most important privatisation cases in Romania, involving the petrochemical plant Oltchim, is about to be officially declared a failure. Canada-based Exall Resources Company had failed to pay the $9.3 million for the controlling interests of the plant by yesterday evening, so that the privatisation contract may be declared null and void as of today.

Those at Exall were not able to collect the $25 million they were supposed to deposit into the escrow account, says sources with the Privatisation Authority (APAPS). The Canadians had to prove that the escrow account actually existed at the moment when they should have paid for the shares.

“Exall officials said they had money for the shares only. Furthermore, they conditioned the payment of the $9 million on a partial change of the obligations initially assumed,” the above-quoted sources told Ziarul Financiar.

Exall is a Canadian mining company, with $20 million in annual turnover and having posted losses over the past two years.

As Oltchim ($210 million in turnover last year) was much larger a company than Exall, the Canadians formed a financial consortium Oltchim Acquisition Company, which they said was comprised of British PVC Group dealing in the same field as Oltchim, Canada-based SNC Lavalin constructions group, the European Bank for Reconstruction and Development (EBRD) and the International Finance Corporation (IFC), World Bank’s investment division, in order to take part in Oltchim’s privatisation

The financial support of the consortium seems to have vanished into thin air in the mean time. Or maybe it never existed, since officials of the institutions in the consortium have repeatedly said they backed Exall up only from a consultant position.

“They argued their impossibility to open the escrow account by PVC’s backing out, as it was supposed to come up with $10 million. Actually, everyone feels it is EBRD and IFC that withdrew support, instead,” say sources.

The privatisation contract could be cancelled today, because the Privatisation Authority was unable to verify by a banking statement that Exall had indeed paid for the stock.

The cancellation of the contract will be the end of a confusing story, which started by a privatisation tender, attended only by Exall and a company, Romarta, backed by an investment fund, namely Broadhurst.

Exall won the tender and signed the privatisation contract but did not pay the shares at the first deadline, July 24, as neither is it likely to have met the final deadline, after having been granted an extension by yesterday.