On paper, 2012 should be the year of the biggest privatizations, but less than half are on schedule. As far as achievements are concerned, the Government can tick the adoption of the ordinance on corporate governance, which will make state-run companies more transparent, but which has yet to be implemented in any of the companies.
Proceedings to sell 15% stakes in Transelectrica, Transgaz and Romgaz started in May 2010, when then-economy minister Adriean Videanu promised to list Romgaz by the end of 2010. Two years later, the state managed to select the brokers for the three offerings, but has yet to finalize any of them. The only promise kept has been the offering to sell a 9.84% stake in Petrom, which was conducted in July 2011, but ended in failure because it occurred right at the time when international stock exchanges plummeted because of the sovereign debt crisis in the eurozone.
So, after two years of promises, the state has yet to collect any money from privatizations. Moreover, companies such as Oltchim or CFR Marfa are still in the state’s portfolio and their performance is increasingly poor, piling up losses and increasingly higher debts.
The Government is pressured to go ahead with stock exchange privatizations both by the IMF and by Fondul Proprietatea investment fund. A law, according to which the state has to list stakes of at least 5% in companies where Fondul Proprietatea is a minority shareholder, came into force in January.
So on paper things look promising for the stock exchange. But what is the actual stage of privatizations?
The privatization of Oltchim Ramnicu-Valcea (uncertain)
The Romanian state promised IMF representatives that it would finalize the privatization of the largest chemical plant in Romania, Oltchim Ramnicu-Valcea (OLT.RO), by the end of April of this year.
However, the Government was in no hurry to proceed with the privatization process, and only made the first step towards selecting the consultant at the end of last year, although the company is in a very difficult situation. PricewaterhouseCoopers was chosen through an auction to advise Oltchim’s privatization in mid-December.
The IPO for 20% in Tarom is late
The Transport Ministry signed on December 16 the brokerage contract for the initial public offering to sell 20% in Tarom with a consortium consisting of brokerage Carpatica Invest and Swiss Capital. The consortium was in fact the only one to submit an offer for the listing of Tarom. But the consortium will collect a 1.99% fixed fee of the value of the offering. The deadline for launching the offering is end of April.
The offering to sell 15% in Transelectrica (on schedule)
Transelectrica’s offering is in the most advanced stage and is set to be launched by the end of the month. Until the offering can be launched, several steps need to be taken: the approval of the preliminary prospectus by the stock exchange watchdog CNVM, organizing a roadshow, the brokers setting the offering price, and the Government approving the price.
The offering to sell 15% in Transgaz (slightly late)
The Economy Ministry has recently signed the brokerage contract with the consortium made up of Raiffeisen Capital & Investment, Wood, and BT Securities, the only consortium taking part in the December auction. The offering could be launched in May at the latest, so the deadline committed to (end of April) could be extended. Transgaz is one of the profitable state-run companies, so the offering will generate interest, but the price that the Government will ask is important. Currently Transelectrica is valued at EUR668 million on the stock exchange, and the 15% stake that the state plans to sell is worth EUR100 million.
The sale of a minority stake in postal company Posta Romana (yet to start)
The Communications Ministry on Tuesday cancelled the procedure of awarding the contract for economic, technical and legal expertise services aimed at attracting a strategic minority investor at Posta Romana because of procedural flaws. But it added that the procedure of awarding the contract would be resumed after the situation is remedied, but that the deadline (end of April) would most likely not be met.
The privatization of Cuprumin by mid-February (postponed)
At the end of October 2011, the Economy Ministry announced it would privatize Cupru Min, and that the method chosen would be through an open outcry auction, although originally the company was supposed to be sold on the capital market, a much more transparent method. The starting price of the auction is 263.3 million lei, with Cuprumin having the rights to exploit the largest copper ore in Romania, in Rosia Poieni, accounting for around 60% of Romania’s copper reserves, currently valued at $30 billion. The auction has been put off by three months, with the state saying investors were interested in prospecting the area before submitting a concrete offering.
The listing of 15% in Romgaz by the end of June (slightly late)
The Economy Ministry has recently selected the consortium consisting of Goldman Sachs, Erste, BCR, and Raiffeisen Capital & Investment to broker the stock exchange listing of Romgaz, which could be the biggest listing in the history of the Bucharest stock exchange. Preparations for the offering could take at least six months. The offering could amount to EUR400 million.
The listing of 10% in Hidroelectrica (late)
The state committed to select the broker for Hidroelectrica’s IPO by mid-February, so that the offering can be launched by the end of October. The ad for the auction to select the broker was published on Wednesday. Brokers’ offerings will be submitted by March 1, so Hidroelectrica’s EUR350 million offering is behind.
The resumption of the offering to sell 9,84% in Petrom (uncertain)
The state did not manage to sell 9.84% in Petrom last year and promised it would try again in the first half of this year, but for the time being it is not known when Petrom’s offering will be resumed or in what form. The 9.84% stake is currently valued at EUR443 million.
Privatization of CFR Marfa (uncertain)
Originally the Government had put CFR Marfa on the list of companies for which new managers would be recruited from the private sector and had committed to sell a minority stake. But the strategy was changed after the latest negotiations with the IMF, and now it is set to be privatized in its entirety.
However, CFR is a sensitive company and the privatization process is set to be very difficult. No new information on the privatization of CFR Marfa has emerged since December, although the consultant for this transaction should be selected by the end of this month.
(English version by Daniela Stoican)