EU approves Romania debt-to-equity swap deal for Oltchim

08 March 2012 16:09  [Source: ICIS news]

BUCHAREST (ICIS)--The European Commission has approved Romania’s plan to provide state financial support for chemical company Oltchim, an official at the country’s antitrust body said on Thursday.

Bogdan Chiritoiu, president of the Competition Council, said the Commission had approved a €135m ($178m) debt-to-equity swap for the debt-ridden chemical company.

Oltchim has not yet been officially informed about the decision, its CEO Constantin Roibu said, and the Commission was not immediately available to comment.

A formal investigation under EC Treaty state aid rules was opened in September 2009 into Romania's plans to grant the debt-to-equity swap and a €339.2m state guarantee for Oltchim.

The Commission said it must verify whether the Romanian government’s package of financial support for Oltchim would constitute state aid and, if so, whether such measures would not give rise to excessive distortions of competition.

EU state aid rules stipulate “that interventions by public authorities in companies carrying out economic activities can be considered free of aid if they are made on terms that a private player operating under market conditions would have accepted”, according to the Commission.

In a related development, Oltchim’s shareholders on Wednesday named Karoly Borbely as the new chairman of the board, effective from 15 March.

Borbely, previously a state secretary within Romania’s Economy Ministry, has replaced Constantin Dascalu who last month resigned for personal reasons.

The Ministry of Economy is the majority stakeholder in Oltchim. The company is in the process of privatisation, with the government pushing forward a timetable for the disposal of its 54.79% stake in the company.

An invitation for bids in the sell-off is to be issued in coming months.

Based at Ramnicu Valcea in southern Romania, Oltchim produces caustic soda, petrochemicals, agrochemicals, inorganic products and building materials, including insulating PVC for panels, doors and window frames.

($1 = €0.76)

By: Marian Chiriac
+44 20 8652 3214

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