Thursday, July 9, 2009

Romania to help Oltchim buy Petrom assets -report

BUCHAREST, July 9 (Reuters) - Romania plans to help chemical firm Oltchim OLTC.BX acquire Petrom's SNPP.BX petrochemicals plant by next month, Prime Minister Emil Boc was quoted as saying on Thursday.

Constantin Roibu, the chief executive of state-controlled Oltchim told Reuters last month his company was in talks with several banks for a 70 million euros ($100 million) loan to fund the acquisition.Many analysts say the debt-laden Oltchim faces serious problems in obtaining financing, especially during a global cash squeeze that has also reduced demand for its products.

But Prime Minister Emil Boc said the government will lend a hand to the ailing company and give state guarantees for 50 million euros."The guarantee is on its way and we hope the takeover will be completed at the start of August," Boc was quoted as saying by state news agency Agerpres.

Boc also said the government wants to guarantee 80 percent of Oltchim's long-term investment plans of 400 million euros and may also consider transferring its debt into the portfolio of the state's privatisation agency AVAS.At the end of 2008, Oltchim had debt maturing this year worth of 1.1 billion lei ($365 million) and longer-term debt of about 600 million lei. Its 2008 turnover stood at around 2 billion lei and it posted net losses of 234 million lei.Oltchim works only at a third of its capacity since Romania's top oil and gas group Petrom, majority owned by Austria's OMV (OMVV.VI), halted petrochemicals production.

Oltchim needs ethylene and propylene from Petrom, which has said it is not interested in keeping the plant, in dire need of upgrades, as it is considered a non-core business.Analysts say Petrom needs to finalise the deal as soon as possible as lack of investment may result in impairments which will affect the group's profit.At 1018 GMT Oltchim shares stood at 0.31 lei, up 3.33 percent on the day, while Petrom's traded 2.13 percent higher at 0.24 lei. Both stocks outperform the bourse's main index .BETI which rose 0.5 percent in line with regional peers. (Reporting by Marius Zaharia; Editing by Greg Mahlich)

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