BUCHAREST, July 16 (Reuters) - Romania's government has approved a debt-for-equity swap scheme for chemical plant Oltchim (OLTC.BX) and endorsed a plan to offer it guarantees for a 300 million euros ($423 million) development loan.
Oltchim, which plans to acquire petrochemical assets owned by the country's biggest oil firm Petrom (SNPP.BX), faces serious problems in getting financing, especially at times of crisis that has also reduced demand for its products.
The chief executive of state-controlled Oltchim told Reuters last month his company was in talks with several banks for a 70 million euros loan to fund the acquisition.
The cabinet said in a statement it adopted a memorandum on Wednesday to allow 134 million euros owed by the company to the government to be converted into shares in the company, instead."We enforced the preparatory mechanism of state guarantees, for a 300 million euro loan which will be guaranteed 80 percent by the state .. to help Oltchim remain a powerful industry in Romania's economy," Prime Minister Emil Boc said in a statement.
Boc said the cabinet was waiting for the European Commission answer regarding the proposed mechanism of state guarantees.Oltchim's turnover stood at around 2 billion lei ($668.2 million) in 2008 when it recorded net losses of 234 million lei.Oltchim works only at a third of its capacity since Petrom, majority owned by Austria's OMV (OMVV.VI), halted petrochemicals production.
At 0840 GMT, Oltchim shares traded about 5 percent up on the day at 0.3390 lei while Petrom shares were 1.25 percent up at 0.2430 lei. ($1=.7099 Euro) ($1=2.993 Lei) (Reporting by Radu Marinas; Editing by Simon Jessop)