The selling price for the 51% stake in CFR Marfa starts from EUR180 million.
“The privatization procedure will continue even if there is only one company left. On condition that it can pay EUR180 million. The price could increase following negotiations if there are several companies involved. We don’t have information at present as to who made it to the prequalification stage,” transport minister Relu Fenechiu told ZF.
The envelopes with the prequalification documents for the privatization of CFR Marfa were opened last week. The bidders were Romania’s Grup Feroviar Roman, another Romanian firm – Transferoviar Grup, which submitted a bid in association with an Austrian company, and US company OmniTRAX.
The winner of the auction will be decided on June 20.
“OmniTRAX, as a bidder, is awaiting the Government’s approval, the announcement will come on May 15,” Julie Slagle, a representative of OmniTRAX, told ZF. She did not answer the question on the company’s turnover and on who the company’s representative in this privatization will be. OmniTRAX says on its website it is one of the largest freight transport management companies in the US. The company has a turnover of EUR30 million.
OmniTRAX manages 16 regional railway lines which serve ten UD states and three Canadian provinces, according to information on the company’ website. The company is part of the Broe group, with activities in real estate, transport and energy.
The US embassy to Bucharest said in answer to ZF’s request that it could not offer information about US citizens or companies, given its policies about data confidentiality. The privatization procedure for CFR Marfa will have three stages: prequalification, negotiation based on preliminary non-binding offers and sealed-envelope auction.
CFR Marfa, which has 39,000 freight cars and 900 locomotives, ended 2011 with a turnover of EUR261 million and losses of EUR22 million. The debts of 1.7 billion lei (around EUR396 million) that CFR Marfa owes to the state will be erased, according to minister Relu Fenechiu.
Another participant in the race to privatize CFR Marfa is the association of Romanian company Transferoviar Grup and Austrian investment fund Donau Finanz.
“We submitted 1,100 pages in a first stage: financial documents, documents that prove the company’s good track record. Donau Finanz has submitted relevant documents and a diagram of the company’s connections,” said Kinga Madarasan, manager of Transferoviar Grup.
According to Finance Ministry data, freight carrier Transferoviar Grup had a turnover of EUR20 million in 2011 and a profit of EUR3 million. The company’s majority shareholder is Calin Mitica, with 98.7% of the capital, while Kinga Madarasan has 1.2%.
The company with whom Transferoviar Grup is associated, Donau Finanz, is an investment fund with assets of over EUR2 billion under management, according to Madarasan.
The other Romanian bidder, Grup Feroviar Roman (GFR), part of the Grampet group, is the largest private railway freight carrier in Romania by turnover. The company held by Gruia Stoica had a turnover of EUR176 million in 2011 and a market share of over 30%, according to the latest data estimated by the company.
In more than ten years, owner Gruia Stoica, a discreet businessman, has step by step developed a profitable in freight transport activities in Romania, Hungary, Serbia and Bulgaria.
What the Competition Council says
The Competition Council, Romania’s antitrust body, has requested information from the bidders considering that this transaction will affect the railway freight transport sector, according to council representatives.
“The purchase of the majority stake in CFR Marfa amounts to economic concentration, so in order for it to work it needs the go-ahead from the Competition authority or from the European Commission,” says Bogdan Chiritoiu, president of the Competition Council.
He says the green light from the European Commission is needed if the transaction is of “community size”, i.e. if the total turnover recorded by all companies involved exceeds EUR5 billion and the total turnover obtained in the EU by at least two companies exceeds EUR250 million. If the figures are lower, the transaction will be examined by the Competition Council.
“Considering the size of CFR Marfa and of the other companies that have submitted bids, a green light from the European Commission could be needed,” he says.
(English version by Daniela Stoican)