Company officials claim not to know the details. Experts on the field say insolvency may be one way of restructuring agreements deemed unprofitable. First hearing is scheduled for today. Bilateral agreements with the so called ‘smart guys’ may be terminated.
According to a Bucharest Tribunal record made public on June 15, 2012 Romania’s biggest electricity producer Hidroelectrica S.A. has filed for insolvency, states the Court website. The first hearing in the case is scheduled for Wednesday June 20. According to zf.ro, declaring insolvency may be a way of restructuring unprofitable commercial agreements, which is actually the main theory explaining the decision made by the Hidroelectrica management to file for insolvency. In other words, the management wants to terminate bilateral agreements with the so called ‘smart guys’ in energy. But the insolvency proceedings also entail the risk that the company may be ruled bankrupt unless the management and the court appointed administrator convince at least three categories of creditors to endorse the reorganisation plan or if the plan is not sanctioned by the syndic judge.Hidroelectrica General Manager Gheorghe Stefan says he is unaware of the details of the insolvency case. Economy Ministry officials could not be contacted for clarifications. Economy Ministry reaction came back later with a statement: “The decision on the request of the insolvency was taken by Hidroelectrica SA Board of Directors and MECMA, as shareholder, not interfere in any way in judicial proceedings involved in state-owned companies to not influence the courts “.Contacted by HotNews.ro, the head of the Office for the State’s Shareholding and Privatisation in Industry (OPSPI) – institution to which the electricity company reports – Remus Vulpescu, said he was not in a position to either confirm or deny the information.
Currently on an official mission to Austria together with PM Victor Ponta, Vulpescu says he will know more about the situation when he returns to the country. The Romanian state and the IMF have agreed that 10 per cent of the Hidroelectrica stock would be sold on the stock exchange. Hidroelectrica is also on the list of state-owned companies where competitions should be held for hiring private managers. According to the OPSPI head, Hidroelectrica could be the first energy operator with an up and running private management by the end of the month.
Daniel Daianu: That’s a strange, phantasmagorical thing
PM Victor Ponta’s honorary adviser Daniel Daianu finds Hidroelectrica’s request to be declared insolvent ‘strange’ and ‘phantasmagorical’, adding that he has no plausible explanation for the decision yet. ‘Such a request is hard to justify, because insolvency proceedings (…) are opened when a private economic organisation is confronted ‘by severe solvability issues and is in an extremely precarious financial situation,’ he said. On the other hand, Daianu said, for Realitatea TV, that ‘there are private companies that are profitable but which, at some point in time, experience a cash strain, but then they resort to options such as a bridge-loan or emergency loan.’ In his opinion, Hidroelectrica’s ‘insolvency cannot be justified’, because the company ‘cannot become insolvent’. As for a suspected intention of renegotiate one of the agreements with the smart guys, ‘it doesn’t stand either’ – he says. ‘It would mean that any company that doesn’t like an agreement it has with a partner it can disavow it by filing for insolvency. That’s phantasmagorical,’ said Daniel Daianu. ‘I have no plausible explanation for the moment,’ he continued, adding that ‘most <smart guys> accepted to renegotiate agreements with Hidroelectrica’.
Videanu: Maybe someone wants to sell it for pittanceFormer Economy minister Adriean Videanu said for Mediafax that there is no justification to declare Hidroelectrica insolvent, and this is either a flawed management decision, or a hint that someone wants to sell the company “for pittance.” According to Videanu, in 2010 Hidroelectrica achieved the biggest profit in history – over EUR 100 M – and in 2011 it paid the state the highest dividends in the history of Hidroelectrica.
Ilie Serbanescu: Insolvency means company is sold to foreign companies
The insolvency motion filed by Hidroelectrica is, in the opinion of economic analyst Ilie Serbanescu, a way of selling the company to foreign operators. ‘The insolvency of Hidroelectrica is the expression of disaster in this country. If the most profitable company files for insolvency as long as it is a monopoly and has so far been stripped by foreigners and Romanians alike, that can only be the expression of the current disaster in Romania. This sort of situation doesn’t even exist in Greece. It’s just a way of robbing the company, of giving it away to foreign companies. Insolvency means the company cannot pay its creditors, who will take it and sell it to foreign operators,’ Ilie Serbanescu told Agerpres, quoted by Money.ro. Solicitor Gheorghe Piperea says the first consequence of the insolvency case is the appointment of a special administrator by the shareholders, replacing the company board of directors and manager. Another consequence of opening insolvency proceedings is that all agreements concluded by Hidroelectrica three years ago, including those with the so-called smart guys, on June 20 will be hit by the presumption of fraud and therefore cancelled rather than rescinded, Piperea also explained. Insolvency, on the other hand, is not going to affect power supply, expert Ionut Purica notes. The Competition Council has recently opened an investigation trying to see if some of the Hidroelectrica clients had made agreements on charging the same energy prices. Hidroelectrica posted EUR 1.41 M net profit and EUR 714 M turnover last year. A week ago, on June 6, OPSPI head Remus Vulpescu was telling a press conference that the price hikes in Hidroelectrica’s bilateral supply agreements negotiated so far with the beneficiaries were too small and so were the reductions in the quantity supplied. He also noted that none of the beneficiaries consented to reducing the term of the agreement. On June 6, Stefan Gheorghe replaced Dragos Zachia as general manager of Hidroelectrica, with a limited term.Premier Victor Ponta on June 7 set up an interministerial committee whose job was to look into the economic and financial situation of Hidroelectrica Bucharest electricity producer subordinated to the Ministry of Economy and to generate measures designed to improve the company performance, according to the text of the PM’s decision.
