The privatisation of Petrom saw the highest price ever being paid by a foreign group for a Romanian company. However, the sale of the oil company also broke another record on the Romanian market, in terms of consulting contracts.
The new record holders are the investment banks Credit Suisse First Boston, ING Barings Ltd and law firm Linklaters, which, according to market sources, will cash more than 20 million dollars for having acted as consultants for the Romanian State in the Petrom deal.
Previously, the largest consulting contracted on the Romanian market had been awarded to the investment bank Goldman Sachs, which collected nine million dollars for advising the Romanian State on the privatisation of national telecom operator RomTelecom.
The full value of the consulting contract for SNP Petrom is the total of both the success fee (1.2% of the transaction value) and the retainer, worth 1.6 million dollars, according to the quoted sources.
The transaction value is made up of the 669 million euros paid by OMV for the 33.34% stake in Petrom, the capital increase worth at least 723 million euros and the 292 million-euro debts taken over by OMV when it acquired the Romanian company. Moreover, the transaction value may also comprise the conversion into shares of a 60 million-euro segment of a loan that Petrom had contracted from the EBRD (European Bank for Reconstruction and Development).
Even without the conversion and the debts, the minimum value of the privatisation contract amounts to at least 1.4 billion euros, which means a success fee of 16.7 million euros, or 20 million dollars, plus the retainer, worth 1.6 million dollars.
It will be very difficult to top the total value of the Petrom contract, since BCR (the Romanian Commercial Bank) for instance has been assessed at one billion dollars during the first stage of the privatisation process. Also, natural gas distributor Distrigaz Sud, which is now being privatised, has been valued at some 500 million dollars.
When contacted by Ziarul Financiar, officials from Credit Suisse First Boston (CSFB) and the Industry Ministry would not comment on the consulting contract.
Out of the seven consortia and investment banks that entered the race for the consulting contract in 2002, the main rivals of the CSFB-ING consortium were other leading investment banks: Bank of America (USA) and JP Morgan (Great Britain).
In fact, JP Morgan and Bank of America had been originally credited with the best chances of landing the contract, after having been shortlisted by the Romanian Government.
Bank of America, however, was out of the race despite submitting the best financial bid (seven million-dollar retainer and $1 success fee), because it had expressed its fee in dollars, instead of percentage points, according to sources close to the consultant selection process.
According to the same sources, JP Morgan wanted a success fee of 0.9% and a retainer worth two million dollars, which placed it close to the CSFB-ING consortium. The contract was then awarded based on the two candidates’ experience in privatising companies with turnover in excess of one billion dollars.
laurentiu.ispir@zf.ro