Oltchim Petrochemical Complex, ready for reorganisation

The turnover of the Oltchim Petrochemical Complex Ramnicu-Valcea has increased to EUR 141.19 million last year, as compared to EUR 112.68 million in 2013, while the losses during exploitation have dropped from EUR 46.1 million to EUR 9.3 million. On the background of these positive results, on February 9 the plant’s reorganisation plan is to be released.

The reorganisation plan for Oltchim complex has been finalised and is to be published on February 9, so that during March 2-10 the plan should be voted by the assembly of creditors. Besides, the bankruptcy judge is to pass confirmation of the reorganisation plan within 15 days after the submission of the assembly of creditors’ report in court, report by which the plan has received the go-ahead. The reorganisation strategy to be submitted for approval to the creditors requires further improvement of the economic and financial results, the strengthening and the preserving of the plant’s financial balance, as well as the plant’s sale to an eligible buyer. The administrators are considering, through the reorganisation programme, technological improvements, mainly targeting the membrane electrolysis equipment. “These works will improve the economic and financial results by cutting down specific consumptions (mainly of electric power) will improve the quality of manufactured products (liquid caustic soda) and will increase the use of production capacity,” a report submitted to the Bucharest Stock Exchange reads. In the event of finding and attracting viable funding sources, the Oltchim administrators intend to restart the phthalic anhydride and the dyoctil phthalate facilities, this decision being expected to lead to further growth in the utilization of the production capacities, to turnover and profitability upsurge.

Growing turnover

According to the report on the 2014 preliminary financial results, published by the administrators of Oltchim plant, the plant’s turnover increased to EUR 141.19 million, against EUR 112.68 million reported in 2013. Besides, the export sales increased last year by 44 percent up to EUR 100 million. Administrators say that EBITDA (earnings before interest, taxes, depreciation and amortisation) calculated strictly for production, has improved by EUR 36.8 million. Thus, the plant recorded last year an operational loss amounting to EUR 9.3 million against EUR 46.1 million losses reported in 2013. Oltchim’s export sales have also increased by 44.08 percent, from EUR 69.406 million to EUR 100.005 million.

“Oltchim’s activity has recorded positive results, positive monthly EBITDA starting October 2014. These positive results were recorded mainly due to the combined efforts of the current management team and of the employees, materialised in regaining confidence of the foreign clients that the company is able to deliver flawless and superior quality products under the contract and, to a lower extent, due to the fall of oil prices,” the report sent to the stock exchange reads.

Debts of over EUR 800 million

The Oltchim Petrochemical Complex has total debts of RON 3.45 billion (EUR 800 million), of which RON 900 million are secured, debts to the budget of RON 1.28 billion and RON 1.25 billion unsecured debts, according to the table of debts released by the Oltchim judicial administrators, Rominsolv and BDO Restructuring in the Insolvency Bulletin.

Among the creditors with secured claims, the largest ones are the banks - BCR being the first, with RON 230 million, a quarter of all secured debts, second is Banca Transilvania with RON 160 million, representing 18 percent of the total secured debts. Other creditors in this category include Electrica with RON 227 million, OMV Petrom with RON 55 million or Salrom National Salt Company with RON 17 million. There are 268 unsecured creditors, companies and individuals who find it almost impossible to recover claims amounting to RON 1.26 billion. At this point, Oltchim privatisation is to be considered completed, the plant will not be offered for sale for three years, during the implementation of the reorganisation plan.

This plan is to be adopted by the Creditors Committee on March 10, 2015, whilst until then SPV Oltchim will be set up. SPV is an Oltchim 2, which will bring together the factory viable assets, including petrochemicals from Arpechim. Unsecured debts will burden the old Oltchim and, most likely, their recovery will be made only to a very limited extent. The plant has shifted in the fourth quarter of last year to operational profit amounting to EUR 336,000 in October and EUR 400,000 in November, and reached a load factor of 27 percent.

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February 2015

June 2017