Petro Carbo Chem files complaint with EC over Oltchim loan

07 August 2009 13:32  [Source: ICIS news]

PRAGUE (ICIS news)--Germany's Petro Carbo Chem (PCC) has filed a complaint with the European Commission’s Directorate General for Competition about a Romanian state loan guarantee under consideration for chemical producer Oltchim, PCC said on Friday.

PCC, a minority activist shareholder in Oltchim, alleged that the Romanian government failed to properly notify the European Commission about a loan guarantee that would cover €49.6m ($70.8m) of a €62m loan that Oltchim intended to borrow in order to acquire Arpechim’s petrochemical unit from Romanian company Petrom.

If the guarantee were approved, it would be provided to Oltchim wrongly under special temporary financial crisis provisions, according to Adam Lamentowicz, a project development manager with PCC.  

“The move is invalid because Oltchim has clearly been in financial difficulty since well before 1 July 2008, the start point for the special financial crisis scheme,” he said.

“Therefore this guarantee can only be regarded as restructuring state aid that must be notified to the [European Commission]. If the [Commission] rules it was wrongly provided at a later date, then Oltchim could find itself in serious financial difficulty. It must be stopped now,” he added. 

PCC has asked the Romanian government to consider allowing it to assume control of Oltchim in a privatisation, rather than moving ahead with a costly state bail-out for the firm.  

The Romanian economy ministry, the majority shareholder in Oltchim, failed to respond to a request for comment on the complaint and privatisation proposal. 

Oltchim spokesman Silviu Pandrea said Oltchim was not aware of PCC's complaint to the Commission, but that it could be proven that the EU body did not need to be notified of the loan guarantee in question.

“The government has decided to support the company under Romanian and European laws. PCC does not have the right ideas or strategy for Oltchim,” he said. 

Overall, the Romanian government's rescue plan for Oltchim is set to provide state guarantees on loans of around €300m and convert debts of approximately €114m owed to state privatisation agency AVAS into stock following a capital increase.

All the other proposed state guarantees have been notified to the Commission, PCC said.

A spokesperson from the Commission’s Directorate General for Competition confirmed PCC's complaint had been received and was being assessed. 

($1 = €0.70)

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By: Will Conroy
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