Oltchim SA Creditors Meeting decided on March 6, 2017 to amend the reorganization plan of the company. Modification refers only to the method of privatization of the plant, which will be sold in packages of functional assets, the document submitted on Thursday to the Bucharest Stock Exchange (BVB) reads. Also, there will be no obligation to transfer the employees to the buyers. The company’s debts remain in its task, hotnews.ro reports.
The decision was taken considering that the initial method of privatization could be considered risky for investors, with the risk that they withdraw. The risk is that investors may be required to pay any damages discovered as a result of an investigation initiated by the European Commission.
The European Commission opened an in-depth probe in April 2016 to verify whether debt write-offs by the Romanian State and continued supplies by State-owned enterprises in favour of Oltchim, despite the company’s deteriorating financial situation, were in line with EU state aid rules. Commissioner Margrethe Vestager, in charge of competition policy, stated: “Following the economic difficulties of Oltchim and the cancellation of public debts owed by the company, we need to verify whether a private creditor would have accepted to act in the same way. Thanks to its recent reorganisation, Oltchim’s financial situation has improved and Romania hopes to find a new investor. Our aim is to facilitate a sustainable future for the economic activities of the company without the need for further government support,” the European Commission informs on its website.
Oltchim is one of the largest petrochemical companies in Romania and South-East Europe. The Romanian State has a controlling stake of 54.8% in the company. In January 2013, the plant was declared insolvent. Since then, it has been in the process of reorganisation following a plan established by the insolvency administrator (and endorsed by a majority of Oltchim’s creditors), with the aim of paying past debts from the proceeds of a future privatisation. As the estimated sale price in the event of a privatisation would not cover the entire debt, Oltchim’s public creditors have accepted total or significant debt waivers.