Siderurgica could be privatised

Siderurgica Hunedoara, the oldest steel plant in Romania, was saved from liquidation and might even be privatised, said Ron Ashkin, an American consultant specialised in restructuring and privatisation, quoted by Reuters.

Ashkin explained that the initial perspectives of the plant, which has an annual capacity of 400,000 tonnes of liquid steel, were rather unfavourable, but added that Siderurgica currently has good chances of being privatised.

“Of almost 100 steel plants in Eastern Europe and the former Soviet Union, none has been saved from liquidation,” Ron Ashkin said. “This is a crucial moment for Siderurgica,” he added. Ashkin works for Recovery Group, which specialises in counselling on restructuring and has been operating in Eastern Europe for the past ten years.

Siderurgica Hunedoara is one of the 62 companies that have to be restructured and privatised as part of the PSAL (Private Sector Adjustment Loan) agreement worth 300 million dollars signed with the World Bank.

Sources within SOF (State Ownership Fund) stated that the documentation regarding Siderurgica’s privatisation strategy would be submitted to the Government next week.

In March, Ron Ashkin led a team of specialists who visited the plant in Hunedoara, in order to start liquidation or restructuring operations.

“The plant in Hunedoara is part of a group of five companies with similar problems, which have to be either restructured or shut down,” Ashkin said.

The problems Siderurgica is currently facing are the same as those affecting the metallurgic sector in all East European countries.

“Most of these state-owned companies are administered by former managers, who establish their strategies according to the production plan, ignoring the sales figures,” the Recovery Group expert added. He says that he has already recommended SOF to cut down the number of employees, from 8,000 to 1,600 and to convert assets into working capital.

“The managers are very reluctant. They used to skip paying their debts to the state budget, but things have changed now,” Ashkin says.