Friday, November 12, 2010

Romania to Finish Sales of State-Owned Utility Stakes in 2011, Ariton Says

By Andra Timu and Irina Savu - Nov 12, 2010

Romania plans to finish selling minority stakes in utilities Transgaz SA and Transelectrica SA next year as it raises money to finance the budget, Economy Minister Ion Ariton said.

The government wants to sell a 15 percent stake in its natural-gas transmission company, Transgaz, on the Bucharest Stock Exchange in the second half of next year after starting procedures in the first quarter, Ariton said in an e-mailed response to Bloomberg questions.

“In Transelectrica’s case, the sale procedures will be initiated by the end of this year and will be finalized in the middle of next year,” said Ariton.

Romania plans to sell minority holdings of its utilities and largest oil company OMV Petrom SA to meet international bailout conditions and cover infrastructure investments. The country is relying on a 20 billion-euro ($27 billion) loan led by the International Monetary Fund after the nation’s recession and austerity measures reduced budget revenue.

Romania may raise more than 2 billion euros from the energy-stake sales, former Economy Minister Adriean Videanu said on Aug. 19.

“The money from the sales will represent revenue for the state budget,” Ariton said.

The administration, which owns 20.6 percent of Petrom, plans to sell 9.84 percent of the company within six months to one year, said Tudor Serban, an adviser to the Economy Ministry, on Oct. 16. It will also seek to sell its minority stakes in the Romanian units of Enel SpA andE.ON AG to its majority owners, Ariton said.

Legal Adviser

The ministry is currently selecting a legal adviser for the sale of the Petrom stake before picking a brokerage to manage the sale on the Bucharest Stock Exchange, according to Ariton.

The government also aims to sell a majority stake in unprofitable Oltchim SA, a PVC maker. The sale is based on a proposal from the IMF.

Oltchim is awaiting approval from the European Commission to increase its share capital and convert debt worth 538 million lei ($171 million) into shares, which qualifies as state aid strictly regulated under European Union rules, according to the minister.

The company’s other creditors, including Erste Group AG’s Banca Comerciala Romana SA, the largest bank, may also be able to become shareholders in Oltchin, after converting debt into stakes, Ariton said.

A U.S. and a European investment fund are interested in becoming shareholders in Oltchim, Deputy Economy Minister Karoly Borbely said on Oct. 25.

To contact the reporters on this story: Andra Timu in Bucharest at atimu@bloomberg.net; Irina Savu in Bucharest at isavu@bloomberg.net

To contact the editor responsible for this story: James M. Gomez in Prague at jagomez@bloomberg.net

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