Oltchim: what's next?

Well, today is the day when Dan Diaconescu (otherwise known as DD) has to come up with the colour of 45 million euros for Oltchim chemical plant, even though the task book gave 2013 as the deadline to pay, he said.

He won the open tender to buy a 54.8 percent stake in the industrial chemicals group last week, offering 45 million euros, or more than ten times the starting price. Most think he'll never do it. Ronnie Smith for Romania Insider writes, "There was no detailed prospectus issued and no proposals, offers, ideas or guarantees made concerning the payment of debt and restructuring of the business going forward. The government went hopefully to the market saying, ‘This run-down, very troubled, company is for sale and the highest bidder wins, quickly as possible please and no need for adequate time for proper due diligence to be carried out.’ (....) If the sale is not completed Oltchim will be put back on the market, according to Mr Ponta, and the government will have a second chance to learn how to sell a state asset without creating yet another national scandal by reason of its monumental lack of brains."

The question is, was DD's bid simply a "piece of political theatre", as has also been suggested by Ronnie Smith, or a very serious business offer? The state would almost certainly have to come up with an impressive pile of dosh to help out the blighted company which stopped production in August due to insurmountable debts if DD doesn't oblige. Since Oltchim is currently state-owned, it begs to question why on earth the government hasn't been paying wages when they've had plenty of money for other things... Silly question, really. Oltchim's workforce today is out on strike once again, demanding their unpaid dues - and DD has promised to show up with suitcases of cash from his bank account withdrawn over the counter to pay them. Theatricals indeed. Like something out of The Three Musketeers. Perhaps, during DD's three-day mystery tour dashing all over Europe, he found a couple of nice fat foreign investors?

Other bidders, according to The Financial included the German chemicals and energy company PCC, a current minority shareholder in Oltchim, and two companies owned by Romanian businessman Stefan Vuza. Looks like they may have had a lucky escape... Last Monday, DD, who is facing trial over blackmail, refused to sign the contract arguing he had found "mistakes." He then promptly left the country. Was he stalling for time?  

Today's Romania Insider reports, "The state asked the investor for an original bank statement on Friday evening, to show he has the money, but Diaconescu said that was impossible to get before the end of the week-end. Diaconescu, who owns the OTV tv station, held another round of negotiations with Romania’s Economy Ministry on Friday evening, but that ended in disagreement. The investors complained of mistakes in the contract, as well as the inappropriate behavior of those who attended the negotiations. Remus Vulpescu, the head of Office of State Ownership and Privatization in Industry (OPSPI), allegedly opened his laptop and asked the participants what sort of music they want to listen to, and played some songs, including by rock legends AC/DC." Dear oh dear...

Everything in Romania always comes down to politics and this is no different. DD has his own party, the PPDD, who are looking to get their foot in the door, probably against USL.

Speaking to Beyondbrics, DD defended his bid:

“The prime minister is against me personally and against my bid. I’ve been threatened with prison, which isn’t normal from the head of government of an EU country. I cannot believe that this is happening in the EU. Our price was calculated on what is necessary for Oltchim. Our plan is to attract a major player, and we have had discussions – though I’m not in a position to reveal with whom. You will be very, very impressed with our next steps.” I'm agog! 'Very, very impressed'?

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Why on earth would DD want such an indebted company anyway? Did he realise the extent of the debts, reported at around 700 million euros, before he entered the bid? To turn such a disaster into anything profitable would take huge investment that many doubt DD actually has at his disposal. If he is having trouble finding 45 million, how will he come up with the rest? Surely, any serious investor would have made it his business to do a lot of digging in advance?

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Ronnie Smith writes, "Only when he came to sign the sales contract with the government did Mr Diaconescu start asking questions and seeking guarantees about debt payments. A serious investor would not have entered the sale process without first knowing that the price to be paid for the business and its assets would be offset against the debt held by the company. Any serious buyer would understand that he is doing the government a favor by taking Oltchim off their hands and would not expect to pay for the privilege up front and also cover the company’s debt.

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Mr Diaconescu has either made a big mistake, is in the process of being let down by foreign investment partners or is engaged in a piece of political theater in the hope that he can find some benefit at the December elections."

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Over the years, the SRI have sent a total of 190 reports on the gloomy situation at Oltchim; all governments have certainly known of its slippery decline to the point it finds itself today...

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So will DD have the money or won't he? Beyondbrics says that consensus is a resounding 'no' - with the government apparently against him and things getting worse at Oltchim by the minute, things don't look very promising. This is all, of course, pure speculation on a very tangled story in a country where things are never quite what they seem. So many invisible undercurrents. The country of my heart is, and always has been (to quote a friend of mine), a sort of mirror of all the screw-ups of Europe. Through naïve lack of understanding perhaps, or just bare-faced arrogance (I'm not sure which), Romania manages to lay out all the lies and hypocrisy known to man directly under a magnifying glass for all the world to see that better 'evolved' nations spend so much time and energy actually trying to hide. I have to admit harbouring a certain admiration for DD - the man definitely has a supreme dose of chutzpah if nothing else.

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By tomorrow, we'll know, I suppose. Until then, sit tight. This seems like yet another script from a Caragiale farce.

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UPDATE, midnight, French time:

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What did I say about a Caragiale farce? I was wrong. This is more like a Peter Sellars extravaganza.

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This evening, DD showed up to see Daniel Chitoiu, Minister of Economy, with seven dustbin liners stuffed full of 500 euros bills for the workforce of Oltchim, whilst, meanwhile back in Ramnicu Valcea, protests continued against unpaid salaries for the last two months. Ziare.com reports that DD was turned away by Chitoiu and informed that he had lost the contract to privatise Oltchim because he hadn't signed the official document in time, hadn't presented a business plan and hadn't proved he had the necessary funding. The government reportedly said they would not accept his conditions, since, apart from the above, he didn't pay the 203.1 million lei for the 54.8% either.

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As you will already know, today was the deadline for DD's cash delivery and contract signing, even though he continues to maintain that negotiations should have been allowed to go on until February, 2013.

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A furious DD stated that he had been swindled by the current acting government and that he had the right to continue negotiations until 23h59 tonight. He added that after he had arrived in his own car with his own money, Ponta had ordered his minions to cancel the tender.

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"Ponta should resign at once. He is a monumental liar - he lies as he breathes. He has created a castle of sand and is avoiding telling the truth. He cancelled the tender because he didn't want us to win," DD told reporters. He added that he would sue both Ponta and the chief of the OPSPI, Remus Vulpescu.

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"Ponta will end up in jail," he said as he left the Ministry of Economy.

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Victor Ponta, on the other hand, repeated that DD had not kept his side of the bargain. He had had 10 days to come up with the readies, ie. 45 million euros, not appear with money destined for employees' salaries. Chitoiu meanwhile intends to sue DD for providing false documents and lying to public institutions. Looks like everyone is suing everyone... Apparently, DD had provided a letter from a Dutch investor pledging the 45 million which turned out to be fake. The person concerned didn't have an account with the Dutch bank stated in the document and was found to be living in Spain, earning a living as a writer.

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In response, DD fired back, "our money is destined for the workforce of Oltchim, and I hope that Mr Chitoiu will come up with a positive response tonight, so we can leave for Ramnicu Valcea with the money and find a legal solution." He continued, "the bank accounts for Oltchim are blocked and we cannot throw it into a black hole. Mr Ponta says I don't have the money. Look, I do, and without signing the contract. The government have only cancelled the tender so as to stop the process. There is sufficient money for the employees of Oltchim to cover this turbulent period."

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He didn't actually say how much there was stuffed into his seven bags and neither did he he say precisely where he would be going with it next, according to Ziare.

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Ziare's article is extremely long and really, I don't think I'd survive reading it all to the end... But you get the picture. It's been quite a night.

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Much as I admire DD for being the only one so far to have come anywhere close to pulling a fast one on Ponta, what did he expect? Of course, one can always imagine that he didn't actually want to win after all. Is this one big mis en scène as a profile-boost in the run-up to the polls in December? A generous interpretation of this theory, says Balkans Business News, is that "his demands on Oltchim post-privatisation highlight the plight of workers in Romania's stalling publically owned companies, and the likely harsh effects of sell-offs." Could his 'concern' for the workers of Oltchim, then, which has softened the hearts of many, perhaps take votes away from USL? A load of 'gargara'. And you can bet there'll be more to come...

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The real tragedy is the plight of Oltchim's workers, the sacrifices of these people trying to make ends meet without salaries. This can only end in tears, at least, for them. Any future investor will be unlikely to keep the employment set-up as it is. Potential buyers will eye the debt levels with extreme caution. "It's very complicated," said Chirileasa of Ziarul Financiar. "No one really knows what the best solution is, but privatisation is the only hope as the state cannot support the plant any longer." It doesn't seem to me that the state has been 'supporting' the plant at all. God help the workers of Oltchim...

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For more, see here: EVZ, Revista 22, Mediafax, RTV, Catavencii and TVR Info.

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Comments

[misu]

the entire country turns into DD's OTV