Thursday, June 30, 2011

Romania plans major selloffs under IMF-led aid deal

Wed, Jun 29 2011

BUCHAREST, June 29 (Reuters) - Romania's centrist coalition government has pledged to sell minority stakes in major energy and transport companies by the end of this year and appoint private managers by January under its new IMF-led aid deal.

The country's revised aid letter to the International Monetary Fund, released on Wednesday after a successful review of its 5 billion euros aid package last month, also said the privatisation process will continue in 2012 with more firms.

Most of the selloff plans have been around for years, but successive governments have put privatisation on hold due to labour and political pressure and analysts will watch closely to see if the government makes good on its intentions.

In its outdated, investment-hungry energy sector, the government aims to sell 15 percent stakes in power and gas grid operators Transelectrica ROTEL.BX and Transgaz ROTGN.BX and unlisted gas producer Romgaz.

It also plans to sell 20 percent stakes in flag carrier Tarom and rail freight carrier CFR Marfa, which will be sold entirely at a later date pending market conditions.

For all of these firms, Romania must select legal advisers by mid-July, investment banks for initial public offerings by end-September and complete the sales by the end of the year.

Also, these and other state-owned companies must have private managers appointed by the end of January 2012, a move expected to boost their efficiency. So far, all top company jobs were granted politically.


Romania must also start the process of listing minority stakes in 2012 in its hydro and nuclear power producers, Hidroelectrica and Nuclearelectrica, aiming to complete the sales by the end of March and June, respectively.

The government's IMF letter did not specify how much it estimated it will gain from the selloffs. Earlier this year it estimated energy listings could raise some 2.9 billion lei on the Bucharest bourse.

The government also has until mid-July to come up with concrete plans to lower state-owned companies' arrears, which are a major burden on Romania's fragile economic recovery, and which IMF mission chief Jeffrey Franks has said totalled some 4-5 percent of gross domestic product.

The measures will include moving non-viable firms into bankruptcy, increasing share capital to provide resources to pay arrears and in some cases using privatization proceeds or debt to equity swaps to extinguish them, the cabinet's letter said. (Reporting by Luiza Ilie; Editing by Bernard Orr)

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