The Bucharest Tribunal yesterday admitted giant power generator Hidroelectrica insolvency claim. Although the court ruling is not final and may be appealed against in the Bucharest Court of Appeal, it is immediately enforceable, said the Court-appointed administrator, solicitor Remus Borza, who also noted that the situation as such as quite normal. ‘We do not mean to push Hidroelectrica into bankruptcy, we are just seeking a judicial reorganization in order to identify the shortcomings. The situation clearly indicates that something went wrong in that company. (…) This reorganisation will hopefully only take a year, a year and a half. Normally, a reorganisation may last as long as four years. The company has a debt of RON 200 M towards suppliers and RON 260 M towards banks. The overall debt amounts to EUR 1 bn’, said the Hidroelectrica judicial administrator. The barristers representing some of the Hidroelectrica creditors wanted the judge to recuse himself on grounds of stating his position ex ante, HotNews.ro informs. According to Pro TV, Borza now manages, via the Euro Insol company, an empire made up of real estate companies, factories, transport operators – 140 companies in total, all insolvent and worth EUR 600 M. Some of the companies for which he has been appointed by the court to manage are Romexpo, UCM Resita (in partnership with another firm) and the Plafar National Company subordinated to the Ministry of Economy. But there is more bad news for Romania’s biggest electricity producer. Moody’s have downgraded it from ‘Ba1’ to ‘B2’ following its insolvency claim, and also gave it a negative outlook, warning about a possible new downgrading. ‘The downgrading (…) comes after the company has recently filed for insolvency, which is an indication of a notable rise in its risk of default and brings up the unpredictable nature of insolvency proceedings. The downgrading also reflects the deterioration of premises for an eventual financial support from the Romanian Government to Hidroelectrica in case of necessity, in the context of the passiveness and lack of transparency with regard to recent developments in the company’, said Richard Miratsky, Vice President and senior analyst with Moody’s and lead analyst for Hidroelectrica. The rising default risk following the insolvency claim ‘could accelerate debt maturities beyond the company’s capacity of fulfilling its obligations and might be a significant obstacle in the way of possible attempts at attracting new financing’, the rating agency warns. The insolvency procedure generates uncertainty about Hidroelectrica’s financial capability and flexibility of honouring its service of debt and payments falling due during the insolvency proceedings, therefore the company’s rating has received a negative outlook and remains under scrutiny for potential further downgrading.
‘Inherited’ issues and accusations of defamation
Meanwhile, political attacks also continue. At the beginning of the Cabinet meeting yesterday, Prime Minister Victor Ponta asked that solutions be found in order to deal with the ‘inherited issues’ at Oltchim or Hidroelectrica. Ex-Economy Minister Adriean Videanu answered him at a press conference where he said that he had become the subject of a defamation campaign and that he could not be blackmailed. Videanu rejected the PM’s allegations concerning a note he had signed back in 2010 on the organisation of an electricity export. The former Government official said Ponta was making a mistake, referring to a meeting he had with the trade unions and management of energy operators in Gorj, when a decision was made to organise an export of energy from Turceni, Rovinari and Hidroelectrica as a mix through Electrica S.A., so that the stock of coal SNLO had at the time could be used up. Videanu also said that all of the Hidroelectrica agreements with the ‘smart guys’ had been signed in 2003 and 2004, when Victor Ponta was heading the Corps of Control, and promised to file a complaint over his Ponta’s action back than with the relevant judicial authorities. He further said that, in 2006, Victor Ponta was accusing Codrut Seres of signing agreements with Grivco and noted he hoped he would stick by his position. Adriean Videanu also said that, in 2009, he had not influenced in any way the management’s decision to renegotiate agreements with the ‘smart guys’ but noted that Hidroelectrica was saved from bankruptcy by that renegotiation. On the other hand, Videanu said the Hidroelectrica insolvency claim was ‘a grievous management error that will cause inappreciable damage’, pointing out that Hidroelectrica had made a profit of RON 20 M in the first five months of the year.