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Bucharest
May 18, 2021
BUSINESS

CFR sold to GFR in EUR 200 M deal

Grup Feroviar Roman (GFR) won the bid for the takeover of CFR Marfa, the Transportation Minister Relu Fenechiu announced in a press conference last night.

After seven hours of negotiations, GFR accepted to pay EUR 200 M for the national freight railway comp. and to make investments worth some EUR 900 M.
Earlier in the day, Fenechiu said that the Ministry was conducting negotiations with GFR as the sole bidder that had made some requirements that finally had been overcome. The privatization of CFR was the first test of the Ponta Cabinet after the Oltchim last year and an important commitment towards the IMF, within the current agreement.
The privatization commission from the Ministry of Transport yesterday opened the bid made by the only investor still in the CFR Marfa privatisation race – Grup Feroviar Roman. ‘The company’s technical offer was correct and GFR was declared qualified. The financial offer, however, was made subject to certain conditions which are now being negotiated. If we finalise the negotiation so that the financial offer has no strings attached, we will also finalise the procedure. If that doesn’t happen, the bidder will be disqualified’, Transport Minister Relu Fenechiu said.
As GFR has made an offer containing new conditions, the Transport Ministry has one legal option – disqualify the bidder, according to the Transferoviar Grup-Donau Finanz association that has recently dropped out of the privatisation of the cargo rail transport operator.
This is the second attempt to sell CFR Marfa, all bids having been dismissed as incomplete – according to the transport minister – in a first phase.
Also, a very important issue is the visit of IMF Managing Director Christine Lagarde in Romania is scheduled for July 16. However, the presence of the financial institution official in Bucharest has become uncertain because of the delays in designating a winning bid for the privatisation of CFR Marfa, a pre-condition set forth in the agreement, Mediafax sources note.
Before Minister Fenechiu’s appearance on TV, Prime Minister Victor Ponta had said the procedures for privatisation of CFR Marfa were met and were conducted in a transparent manner, adding that now he can only ask the Ministry of Transport to negotiate very well, after the winner is declared, as regards the investment plan, Agerpres reports. ‘I do not expect that everyone will be ever satisfied. When Oltchim was not privatized, everybody brought me criticism, asking why it was not privatized, now, if we privatize CFR, they criticize me for why we privatize. When a foreign company comes, why should we give it to strangers? When a Romanian company comes, why does a Romanian company is coming? But, much more important than the price is the investment plan, how to retain the work places and, in fact, the company development capacity in the coming years’, the Prime Minister explained after attending the signing of a protocol between the Ministry of Environment and Climate Change and the Centre for Sustainable Policies Ecopolis. Ponta again rejected allegations, according to which CFR Marfa debt conversion into stock would have been made during the privatization process.
Professor Daniel Daianu – hopeful, analyst Lucian Isar – pessimistic
In an interview for RFI, the economist and former Finance Minister Daniel Daianu said, during a crisis period, privatisations are often done with the seller being pushed with his back against the corner. ‘An auction is not always the way to the best result’. Daianu hopes CFR Marfa will recover after privatisation. ‘The railway cannot be substituted. The Romanian railway is part of a European network. Romania has a geographic situation, a size that obliges not only its Government, but also European partners not to be careless about what happens to this company. Romania is a NATO member’. Analyst Lucian Isar, in turn, thinks the future looks gloomy for CFR Marfa, privatised or not: ‘This company is sliding down straight into insolvency and dissolution’, he said on a Realitatea TV show.
Employees protest for third consecutive time
CFR workers protested for the third consecutive day in front of the Ministry of Transport, unhappy with the situation of the company, just as the envelope with the bid on CFR Marfa was being opened, HotNews.ro notes. CFR employees want a social agreement with the heads of the ministry to secure genuine job protection. ‘Railway salaries have been frozen for 5 years, there ahs been no pay rise at all. All our entitlements have been cut. (…) A restructuring programme will begin with 1,000 people from every company’, said a labour union vice president.
On the other hand, on May 28, 2013, after the privatisation bids had been filed, CFR Marfa shareholders decided to give 356 assets and 28 ha of land with an inventory value of EUR 11.4 M, currently frozen, to two companies, free of charge, ZiuaNews publication informs. At the same time, a decision was made to remove other 291 assets and 10 ha of land evaluated at EUR 2.8 M from the property of CFR Marfa. Many highly attractive properties and fixed assets currently frozen have been transferred to other entities to CFR SA and Societatea de Administrare Active Feroviare SA (SAAF). According to ZiuaNews, all buildings, lands and fixed assets that have been transferred from the company undergoing privatisation to the other CFR companies were evaluated at dumping rates.

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