Poland's Ciech may not attract buyer unless government backs down

The flagship privatization of Poland's Ciech again looks shaky as reports suggest the country's treasury is unwilling to accept lower bids for the group. Ciech is Europe's second largest producer of soda ash and this market has not been performing well. As the privatization process stumbles on it is looking more and more like the country's government is not taking a realistic view on valuations, even in the midst of the downturn.

ICIS news quotes analyst Kamil Kliszcz at Poland's BRE Bank saying: "It seems the treasury is holding out for a high price from a bidder despite the effects of the economic downturn having created a difficult environment for it as the seller. So the whole privatisation could turn on whether there is or is not a strong pick-up this year in Ciech's main markets."

As Europe's second largest producer of soda ash, Ciech would not be happy about the current deterioration in the soda ash market, but would be encouraged that its organic division, particularly its toluene di-isocyanate (TDI) business, was experiencing improved orders, Kliscz added.

Kliszcz also said potential bidders for the group might be deterred by the conditions attached to the debt restructuring deal Ciech has struck with a consortium of banks - an agreement the treasury had demanded as a condition for restarting the Ciech privatization.