Copper and wire manufacturer Cuprom has hired international banks Merrill Lynch and Deutsche Bank to raise 600 million dollars (450 million euros) to finance the acquisition of assets and licences from RTB Bor, the copper mining site the Serbian state is selling.
"An agreement has been concluded, with the two banks set to raise the money and I don't think there will be any problems. We anticipate to recoup our entire investment in about 8 to 10 years and turn the complex in Bor around in 3 to 4 years," stated Horia Simu, general manager of Cuprom.
The Romanian company controlled by two former bankers formerly employed by Citibank Romania- Horia Simu and Horia Pitulea, posted 210 million dollars (157 million euros) in turnover and 15 million-dollar profit.
Cuprom owns two facilities in Baia Mare and Zalau, and now intends to expand to Serbia, where it won a tender to buy copper mines of the RTB Bor company. At present, the Serbian company is losing about 45 million dollars (36 million euros) a year.
Cuprom will have to pay 400 million dollars for the assets of RTB Bor and also an investment commitment worth 200 million dollars for the next four years.
Simu and Pitulea along with Ionut Costea, the current chairman of Raiffeisen Banca pentru Locuinte (Raiffeisen Housing Bank) bought the factories in Zalau and Baia Mare a few years ago, which they managed to restructure and make profitable.
At present, Cuprom is attempting to expand. Apart from the business in Serbia, the "copper bankers" are running a consortium that has been in talks over a partnership contract with the Romanian state since November for the mining operations in Moldova Noua and Abrud, which were halted two or three months ago and the employees laid off and offered redundancy packages. Other than Cuprom, the consortium also includes Energo Mineral, a company that specialises in trade in non-ferrous ores and Ipronef, an institute that conducts non-ferrous metallurgy research.
According to Cuprom management, the deadline for the talks with the state expired yesterday, a time at which a last meeting was to be held.
"We hope to reach an agreement but I am sceptical about it. All our attempts so far have not received an answer, for example the decisions relating to state provided guarantees for mining licences, as well as the sale of unencumbered assets, as is the case with the transaction in Serbia," Horia Simu stated.
Mining companies Cuprom Abrud and Moldomin Moldova Noua have large debts to various debtors, as such there is a risk that their mining licences could be withdrawn if a debtor files for the bankruptcy of the two.
"We offered to invest 150 million dollars in the two Romanian mines for which we do not have the licences guaranteed, while investments for the four mines in Serbia amounted to 200 million dollars," Simu says.
Cuprom explains that delaying the resumption of the operations of the two mines causes the quarries to deteriorate and it may take as much as three years and plenty of capital to restore them to optimal operating parameters.
If its negotiations with the Romanian party are successful, Cuprom could become the fourth biggest operator in the European copper industry.
Pentru alte știri, analize, articole și informații din business în timp real urmărește Ziarul Financiar pe WhatsApp Channels
