Termoelectrica borrows more to pay debt

The Finance Ministry will secure a new loan for the national electrical and thermal power producer Termoelectrica worth 190 million euros. The foreign loan will be used to pay an outstanding credit granted by the Romanian State in March this year, which the company spent on repaying another debt, the bond issue released in 2001.

The governmental guarantee will cover both the principal and the interests and fees associated with the loan. The other credit parameters, such as the type, grace period and maturity are to be set with the Finance Ministry’s approval. In 2001, Termoelectrica released a 150 million-euro issue of bonds on the international market, which was secured by the State. The cash raised in this way was used to pay for imports of crude oil, fuel oil, coal for energy-producing purposes and natural gases.

The bonds matured this June and Termoelectrica repaid them with a 6,700bn ROL loan (163 million euros) granted by the Romanian State.

The next step involves taking out a 190 million-euro foreign loan to pay the debt to the State.

According to the Government decision, the company will be allowed to use the amount of the foreign loan left unspent for the payment of the debt to the State to buy more fuel oil, natural gases and coal.

The payment of the debt to the State should see the company with approximately 25 million euros left to finance fuel imports.

The interest paid by Termoelectrica on the loan granted by the State equals the latest interest on the government securities maturing in one year, sold by the Finance Ministry March 2004, that is 18%.

Termoelectrica’s business has shrunk by more than ten times in the last two years, which were marked by outsourcing and streamlining operations.

The company, however, successfully broke even and turned a profit last year, helped out by the “drought” that dealt a heavy blow to the most profitable electrical power producers in Romania, Hidroelectrica and Nuclearelectrica.

Termoelectrica logged 173bn ROL (4.6 million euros) net profit last year, while its operating revenues stood at 8,797bn ROL (234 million euros). These results helped it cover some of the losses of the previous years. Termoelectrica’s historical losses stood at 266 million euros at the end of last year, while its receivables were worth 11,000bn ROL (more than 270 million euros) along with even higher debts.

Termoelectrica’s units as they are now account for a mere 1.5% on the energy market; up until two years ago the figure stood at two thirds.

It now has three branches that are separate legal entities, Deva, Galati and Bucharest, which operate as independent actors on the energy market and have their operations treated separately from those of Termoelectrica in terms of accounting.
vlad.nicolaescu@zf.ro