Romania Declares Chemical Firm Has Gone Bust

After attempts to sell it failed, the mainly state-owned Oltchim chemical company is filing for insolvency.Romania’s mainly state-owned petrochemical and plastics manufacturer, Oltchim, is to start insolvency procedures after sending a request to a local court, the Economy Minister, Varujan Vosganian, said on Wednesday.

Oltchim is the second large state-owned company to ask for insolvency in less than a year.

“Oltchim needs restructuring and insolvency is the best possible way to do this in a fast and secure way. Of course, there will be layoffs, and some company units will have to close, but there is no other way around it,” Vosganian said.

The Romanian state holds a 54.8-per-cent stake in Oltchim and currently the company works at around 30 per cent of its capacity.

In recent months, the centre-left government has been pushing forward with a privatisation timetable for the disposal of its majority stake in Oltchim, as part of a commitment to economic restructuring carried out in consultation with the IMF.

The government cancelled the privatisation of Oltchim on 1 October, saying that the journalist-turned-businessman, Dan Diaconescu, had not provided any documents to prove that he had the money to buy the majority stake that he had won.

On September 21, Diaconescu offered 203 million lei (45 million euro) for a majority stake in the firm. Ten days later, the government cancelled the bid after Diaconescu failed to hand over the money.

After the failed privatization, Romania did not set a new privatization term for the company, which is highly indebted and whose workers have suffered delayed salary payments for months.

Based at Ramnicu Valcea, in southern Romania, Oltchim produces caustic soda, petrochemicals, agrochemicals, inorganic products and building materials. The company has registered losses for the last five years and has debts of around 500 million euro.

In June, a court in Bucharest started hearings on the request of energy producer Hidroelectrica to start insolvency procedures.

Meanwhile, the company renegotiated some of its much-criticized contracts with several companies that were receiving its electricity at below-market prices.