By Andra Timu and Irina Savu - Aug 26, 2010
The Romanian government would prefer Rompetrol Group NV pay its debt to the state in full rather than receive shares from the refinery in a debt-for-equity swap, Finance Minister Sebastian Vladescu said.
The government is willing to extend the initial deadline for the repayment beyond Sept. 30, Vladescu told Bloomberg News in an interview today in Bucharest at the ministry headquarters. Rompetrol said yesterday it wants to pay as much as $100 million from its total debt and convert the rest into shares.
“We are open to negotiations but not to the idea of becoming a shareholder again, especially not a minority one,” Vladescu said. “A negotiation of the payment over a certain period of time might be an option. We would prefer an extension of the deadline and the full payment over a conversion into shares. I don’t think the position of minority shareholder would be advantageous to the Romanian state.”
Rompetrol’s majority owner KazMunaiGaz National Co. must repay bonds held by the Romanian state or convert the debt into shares to be owned by the government. The government converted debt from unpaid taxes into bonds carrying interest in 2003 after businessman Dinu Patriciu bought the state-owned refinery, which was sold later to the Astana-based company.
Dmitry Grigoryev, Rompetrol’s chief financial officer, said yesterday the group can’t repay all the bonds after the group posted a net loss of $100 million in the first half. “The cash flow is not positive so it creates a certain burden,” he said.
Rompetrol Rafinare SA, which manages the refinery, itself had a net loss of $119 million in the first half of the year, compared with a $69 million loss in the same period of 2009 and will not return to profit until 2013, Grigoryev said.
To contact the reporter on this story: Andra Timu in Bucharest at firstname.lastname@example.org.