Romanian State To Sell Stakes In Strategic Companies, Including Rompetrol

KMG International invests over $100 mln in Romania’s Midia terminal in 2007-17

Romania said on Tuesday it will sell minority stakes in several key companies from the sectors of energy and transport infrastructure to finance investment programmes in those enterprises.

The list includes Oltenia energy holding group, Bucharest Airports, Constanta Sea Port, hydro-power producer Hidroelectrica, oil group Rompetrol and salt producer Salrom.

“Following discussions held by the Government, it was agreed that the diversification of ownership in these enterprises by capitalizing minority stakes may be beneficial for their efficiency and profitability,” the government said in a memorandum published on its website.

The government will now start identifying the minority stakes for sale in compliance with the legal provisions currently in force, according to the memorandum.

For Oltenia and Hidroelectrica, the energy ministry suggests to run an initial public offering (IPO) to increase their capital by 15.29% and 15% respectively.

Oltenia energy holding plans to lay off over 5,200 employees by 2020 to cut costs under a plan for financial recovery approved by the energy ministry.

The holding group, set up in 2012, includes state-run mining company SNLO and the Craiova, Turceni and Rovinari thermal power generation complexes. The ministry of economy holds a 77.15% stake in Oltenia, property restitution fund Fondul Proprietatea owns 21.56%, while the remainder is held by Electrocentrale Grup and Inchidere si Conservare Mine.

In June, Hidroelectrica exited insolvency after four years and said it is prepared for listing through an IPO. The IPO of a 15% stake in Hidroelectrica is expected to raise 750 million euro ($852 million), the company’s judicial administrator Euro Insol said at the time.

The government’s plans to dual-list a 15% stake in Hidroelectrica on the Bucharest Stock Exchange, BVB, and the London Stock Exchange have been repeatedly delayed as insolvency proceedings were taking longer than expected, despite the company’s strong financial recovery. The government in Bucharest owns 80.06% of the company and Fondul Proprietatea holds the balance.

For Rompetrol, the energy ministry is considering the sale of 26.69% of the company shares it owns through public auction. Rompetrol is majority owned by Kazakhstan’s KazMunaiGas International with 48% and the Romanian energy ministry with 44.6%. The remainder is on free float on the BVB.

For the Bucharest Airports National Company, CNAB, and Constanta Black Sea port, the transport ministry proposes a capital increase by issuing new shares representing 20-25 percent of the share capital of each company and the sale of the new shares on the BVB. CNAB operates Bucharest’s main airport, Henri Coanda, and a smaller one, Aurel Vlaicu. CNAB is 80%-owned by the transport ministry, the rest is held by Fondul Proprietatea.

Constanta is both a maritime and a river port, connected to the Danube river through the Danube-Black Sea Canal, which provides direct access to the central and eastern European countries. It is owned by the ministry of transport with 60%, while Fondul Proprietatea and local authorities own  20% each.

The legal situation around Salrom is different, the government said. The state owns 51% of Salrom and Fondul Proprietatea owns 49%.

In July, the economy ministry postponed the listing of Salrom for a second time. The ministry said the company is of strategic importance and must remain in state control, and asked Fondul Proprietatea to sell its shares. However, Romanian laws do not allow the ministry to buy back shares in a state-owned company. Fondul Proprietatea then said that Salrom can be listed with the economy ministry as main shareholder and offered to cover all expenses related to the listing.

Over the next period, the authorities will try to clarify certain legal aspects regarding Salrom’s listing by amending or initiating, the government said.

Salrom, Romania’s sole edible salt producer, was founded in 1997 by reorganizing the former Regia Autonoma a Sarii Bucuresti in seven branches in the country:  Ramnicu Valcea, Slanic, Ocna Dej, Ocna Mureș, Targu Ocna, Praid and Cacica. Its  main products are rock salt solution, recrystallized salt and limestone.

($=0.8964 euro)

Author Nicoleta Banila