The Economy Ministry announced on Friday night that the new terms imposed to the auction winner were rejected, so it was cancelling the tender.
A front company of Bayfront, Roman Copper, had been declared the winner over a Dutch and an Australian company with a EUR200 million bid, four times more than the starting price for 100% of Cupru Min.
Bayfront is a small firm specializing in mergers and acquisitions, based in Canada, with turnover below EUR4 million.
Why has the state accepted both as a bidder in the auction and as a winner a company that not much is known about and surrounded by contradictory information.
On the other hand, pressed by the media to say who this firm was and if the fact that nothing was known about it was not a problem, the Economy Ministry and even Prime Minister Mihai Razvan Ungureanu answered that they knew who was “behind” and that the company would meet all its commitments.
Why did the state not sign the contract after all?
Who is behind the firm that won the auction and in the hands of whom would Cupru Min have ended up? What was the quality of the legal consulting services that law firm Bostina si Asociatii provided to the state if the company declared a winner proved unable to pay the price? Ovidiu Constantinescu, spokesperson of Bostina si Asociatii, said the company could not comment on the case without the client’s approval. He did not release the value of the contract with the state for consultancy for Cupru Min’s privatization.
Who is responsible for the fact that the whole privatization process has to be started again from scratch? Who pays the money spent on this failed auction?
Why has the Privatization Office (OPSPI) not introduced from the very start in the tender documentation the conditions regarding the escrow account for guaranteeing environmental investments and the deadline for the winner to come up with the money?
The Cupru Min sale failure is in contrast with the statements made a week ago by Ungureanu, who said the privatization of the company was the start of an economic frenzy that is starting to emerge again.
“To see that a bankrupt company, a black hole, can be sold at four times the price, based on the credibility of a Government that has just taken office and, a few days later, to see a minority stake sold in an incredible oversubscription, of over 150%, I think these are good symptoms. Perhaps this is fever, but it is the fever of a renewed economic frenzy,” Ungureanu said at an economic conference.
Will something change in the future, when a new tender will be launched for Cupru Min?
This is not known, either, said the representatives of the Privatizations Office, which has handled the tender, and is to do an investigation to establish the reasons why the privatization failed, and, if needed, to modify certain procedures in the second tender.
“One needs to make an analysis and the tender will be put back on track. The tender will be resumed as soon as possible because the analysis will not take more than a day or two. We don’t know yet if something will change in the second tender. What we can say is there is still interest for the company,” said Silviu Panastire, advisor to Economy Minister Lucian Bode.
After the Economy Ministry announced the failure of negotiations with Roman Copper on Friday night and that the process would be resumed, Canada’s Bayfront Capital Partners, which controls Roman Copper, said it had reached a definitive verbal agreement with the authorities on Cupru Min.
“We were surprised that the negotiating committee refused to accept our written signature,” the company also said.
Voices from the mergers and acquisitions market say the privatization process was not sufficiently prepared, hence the confusion surrounding this process.
“The privatization was very badly prepared. They should have put conditions to separate those who did not belong there. If you want to privatize such important assets, you have to have objective criteria, financial ones, and put guarantees into the contract,” a lawyer says.
A consultant believes the deviation of the privatization process from what was provided for in the tender documentation could have repercussions for the state.
“The obligation of the escrow account was not stipulated from the very start in the tender documents, although it should have been.”
(English version by Daniela Stoican)