Tuesday, March 31, 2009

EBRD backs Romania's Petrom with loan

BUCHAREST, March 31 (Reuters) - The European Bank for Reconstruction and Development granted a 150 million euro ($199 million) loan to Romania's top oil and gas firm Petrom SNPP.BX in support of the company's restructuring plans.

The funds, earmarked for investments in environmental projects, are part of a 300 million euro loan package and the EBRD will back the firm, majority-controlled by Austria's OMV (OMVV.VI), in obtaining the remainder from a group of commercial banks.

The EBRD said its loan has a 7-year maturity.

Economists' concerns about Romania centre on the country's reliance on external borrowing and that the region's largely foreign-owned banks could shut off lending due to the global credit crunch, leaving private firms starved for cash.

"We will continue to invest in Romania, although not at the same level as in 2008, given the unfavourable economic conditions," Petrom CEO Mariana Gheorghe said in a statement.

In October, the company said it arranged a 3-year credit line worth roughly 375 million euros from a consortium of five banks.

The EBRD will also increase its investments plans in Romania by 500 million euros to 1 billion euros over the next two years as part of an IMF-led 20 billion euros aid package for the Black Sea state, aimed as a cure for the country's large private debt.

The EBRD holds a 2 percent stake in Petrom.

On Tuesday, Petrom shares on the Bucharest bourse traded at 0.1530 lei ($0.047) per share, up 3.4 percent on the day, compared to a year low of 0.1120 hit on Feb. 25. (Reporting by Ioana Patran; Editing by John Stonestreet)

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