After two extensions of the bid submission deadline and a lawsuit from a potential buyer, the Privatisation Authority (APAPS) on Saturday decided to cancel the privatisation process for petrochemical plant Oltchim R=mnicu-V=lcea.
The cancellation was done by withdrawing the offer to sell APAPS’ 53% in Oltchim. The offer was announced on October 27 and the job specifications book had been bought by Russia’s Lukoil giant, Austrian Vienna Capital Partners financial group and by Rompetrol.
The Authority says the decision of APAPS’ Managing Board was made pursuant to Article 9 in Law 137/2002, which says, “under exceptional circumstances and in line with the economic circumstances and the interest shown by potential buyers or considering other factors that may negatively influence the results of a privatisation process, the management of the public institution may decide, for the companies for which the public institution sets the privatisation strategy, to either modify or withdraw the offer to sell.”
The Romanian State had previously tried to sell Oltchim, but the privatisation was cancelled last year as a result of the buyer’s (Canada-based Exall Resources Group) failure to comply with its contractual obligations.
The offer now cancelled was rushed out, with the initial two-week time allotted to investors to come up with bids considered too short.
Albeit APAPS extended the deadline for November 17 and then for November 24, one of the investors interested, the Rompetrol Group still sued it about two weeks ago, filing for the suspension of the privatisation process of Oltchim R=mnicu-V=lcea petrochemical plant.
Rompetrol’s officials were also displeased with the way the job specifications book had been devised, arguing the financials were not up to date, that there were no details about Oltchim’s upcoming split or about how its debts to AVAB (Banking Assets Resolution Authority) were supposed to be swapped for equity, either.
Rompetrol intends to buy Oltchim to meld it with Petromidia’s petrochemical operations.
Lukoil is interested in Oltchim because of its strategy to expand its petrochemical operations in the Balkans, while Vienna Capital Partners is already one of the shareholders of Oltchim’s Hungarian peer, Borsodchem.
APAPS owns about 53% in Oltchim, but the situation of the company’s assets is hardly clear. The company will undergo a split to create two new entities: Oltchim, which will retain the core business, i.e. petrochemistry, and Zooalim, to be made up of Conservil R=ureni, FNC Babeni, Avicola Babeni and Suinprod Babeni, i.e. Oltchim’s current foodstuffs division.
It is yet unclear how the split is supposed to be done and how it will influence the shareholding structure. At the same time, considering Oltchim’s current capital – some $10 million, a $95 million capital increase to AVAB’s benefit at a price equal to the par value may boost its interest to some 90%. The price of this increase has not been set yet, either.