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May 17, 2022

Privatization of CFR Marfa to be resumed

In explaining the failed transfer of ownership, Grup Feroviar Roman mentioned that several of the state rail company’s creditor banks did not approve changing the shareholders’ structure, and the Competition Council did not have the necessary amount of time to rule on the transaction.
Ramona Manescu, Minister of Transport, stated Monday evening that the ministry she is a representative of has met all the requirements for the transfer of ownership, adding that the privatization of CFR Marfa would be resumed.
“The buyer (Grup Feroviar Roman) could have made the payment today (e.n. Monday) by dropping the suspensive contractual conditions. Three such conditions were brought up: the seller must finalize the conversion of state-owned claims on the company at the time of signing the contract, and this condition was met by the seller; the Competition Council must give its approval, and this condition was exclusively the responsibility of the buyer, who could have submitted a notification immediately after winning the bid (e.n. in June), but the buyer eventually submitted it 22 days after the contract was signed (e.n. early September) and only upon notification by the privatization commission,” Manescu said, as cited by Mediafax. Regarding the third condition, according to which the seller was to receive the agreement on modifying the company’s shareholders structure from internal and external financers of CFR Marfa, Manescu said the notifications were sent in due time by the privatization commission, but they were not been approved by all the banks.
The Minister of Transport added that, given these circumstances, a contractual provision took effect, which stipulated that if the conditions are not met within 60 days, the agreement is annulled. The possibility of retaining the EUR 10 million warranty placed by GFR is being analysed by the privatization commission and the consultant, Manescu continued. Gruia Stoica, head of GFR, seems to be of a different opinion, as he hopes to retrieve his advanced payment upon drafting the contract termination minutes. GFR Company was supposed to pay an additional EUR 170 million for CFR Marfa, and GFR’s final offer for 51 percent of shares was EUR 202 million. However, the Competition Council chairman says the institution will analyse the contract before ruling on it, according to realitatea.net. “We will verify whether CSAT’s decision on moving assets from CFR Marfa to CFR Infrastructura was respected, if the state’s rights are protected; we will find a way not to transfer valuable assets to GFR, and analyse the competition impact of specific types of transported goods,” Chiritoiu said. He pointed out that GFR has submitted the privatization contract, but important information related to the target market is missing from the file. Lucian Isar, economic analyst, explained that, following the failed privatization, the state should be left with the EUR 30 million already paid by GFR for the purchase of CFR Marfa. He characterized the privatization as “an act of infamy”, claiming the privatization commission has modified the contractual conditions in favour of the buyer.

Gruia Stoica does not give CFR Marfa up
The privatization of CFR Marfa failed because several of CFR Marfa’s creditor banks did not approve changing the shareholders’ structure, and the Competition Council did not have the necessary amount of time to rule on the transaction, according to GFR. Apart “from the suspensive conditions, the share capital structure – the number of shares corresponding to the 51 percent object of the transfer – was also not finalized. The share capital was not lowered by the value of assets to be transferred from CFR Marfa to other state-owned companies,” GFR claims in a press release. Businessman and owner of GFR, Gruia Stoica, said he would take part in another attempt at privatizing CFR Marfa, if the process is resumed.

Antonescu, PNL: “A phase failure”

In turn, PNL chairman Crin Antonescu stated that the privatization of CFR Marfa is “a phase failure” of which neither the Minister of Transport nor the former minister is guilty. “From the minister’s point of view, the main aspect to be taken into account was the thorough compliance with the law; this is precisely what Ramona Manescu did and I congratulate her for it. Other aspects and more detailed explanations will be made available to us and to you after they are analysed,” Crin Antonescu said further. The former Minister of Transport, Relu Fenechiu, stated for Agerpres that he could not pinpoint a guilty party for the failed privatization of CFR Marfa. “There is an ordinance that establishes a series of financial measures concerning the relationship between CFR Calatori, Infrastructura and Marfa, and I believe the ordinance must be kept in effect; if we assign to it historical debts, we will have to close the company, and we do not want that. According to my external observations after leaving the ministry, the minister fulfilled all her duties. When I was minister, I notified the external and internal financers to transfer the financings to a private shareholder. GFR did not pull back, and it was declared that the process could not go on,” Relu Fenechiu stated.
On the other hand, PSD senator Sorin Bota claims “the bomb with delayed effects left behind by PDL administrations” concerning CFR Marfa should have been “set off sooner and less clumsily” by Cristian Ghibu. The Secretary of State, he continued, and chairman of the privatization commission, “should have left immediately.” Bota believes that “thus, CFR should have been helped to turn profit, a new managerial strategy should have been devised, and only afterward should the privatization have been resumed, so as to serve the state’s interest, evidently.” Cristian Ghibu, former state and then private manager of CFR, became part of the Ministry of Transport upon former Minister Relu Fenechiu’s proposal, as he was considered a close acquaintance of his.

Opposition proposes simple motion

PDL chairman Vasile Blaga stated yesterday that not completing the privatization of CFR Marfa is “another failure trademarked Victor Ponta”, adding that he would propose the Liberal Democrats for PDL to introduce a simple motion in the Parliament on this matter. He also said there was a discrepancy between the government decision and the contract, and the prime minister, together with Ministry of Transport representatives, should explain MPs what it entails. Following the PNL session, Ramona Manescu, Minister of Transport, replied that the PDL leader “makes accusations which he must support.” Regarding the simple motion on Transport, Manescu commented: “He can submit all the motions he wants, as long as they are justified and have a chance of being passed.”

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