EC will mainly investigate the accumulation of debts to Romania’s privatization authority AAAS and the debt cancellations by AAAS and state-owned enterprises under the insolvency administrator’s reorganization plan for Oltchim, and the support granted to Oltchim by two state-owned companies, CET Govora and Salrom which, despite the deteriorating financial situation of Oltchim, continued supplies of electricity, steam and saline solutions to Oltchim.
If the Commission concludes that Oltchim has received state aid, it will then assess whether the aid could be compatible with EU rules that authorize certain categories of aid.
“Following the economic difficulties of Oltchim and the cancellation of public debts owed by the company, we need to verify whether a private creditor would have accepted to act in the same way. Thanks to its recent reorganization, Oltchim’s financial situation has improved and Romania hopes to find a new investor. Our aim is to facilitate a sustainable future for the economic activities of the company without the need for further government support,” Commissioner Margrethe Vestager, in charge of competition policy, stated.
The only category of aid allowed for Oltchim would be rescue and restructuring aid.
“Romania has not notified any restructuring plan for Oltchim to the Commission. To be clear, the insolvency administrator’s reorganization plan for Oltchim has a different purpose and does not appear to meet the criteria under the Guidelines. At this stage, it is therefore the Commission’s preliminary view that the measures under investigation, if found to constitute aid, could not be found compatible with EU state aid rules,” EC said.
EC added that it has concerns that the privatization process of Oltchim, as currently planned, may lead to economic continuity between Oltchim and a future buyer but welcomes the fact that the Romanian authorities have now signaled their interest in ensuring that the process will not lead to economic continuity, so as to avoid a situation where a buyer would benefit from any past aid granted to Oltchim and could be liable to pay it back .
Oltchim is one of the largest petrochemical companies in Romania and in southeastern Europe.
The plant, which has been under insolvency since January 2013, is 54.8% owned by the Economy Ministry.
Since then, it has been subject to reorganization following a plan established by the insolvency administrator (and endorsed by a majority of Oltchim’s creditors), with the aim of paying past debts from the proceeds of a future privatization. As the estimated sale price in the event of a privatization would not cover the entire debt, Oltchim’s public creditors have accepted total or significant debt waivers, EC said.