Termoelectrica found itself unable to use its own liquidities to reimburse the foreign bond issue launched in 1999, which is worth 160 million euros and reached maturity on March 27th, this year.
Its borrower reputation in front of foreign capital markets, and especially that of the Romanian state that had guaranteed the loan, was saved by the government through an emergency loan worth 6,700 billion ROL (167 million euros) granted by the state treasury.
As a consequence, Termoelectrica's incapacity to cash in its bills is throwing the state budget into disorder.
This is because the sum of 6,700 billion ROL endangers the Q1 budget deficit target, a commitment made with the International Monetary Fund, which would not allow the emergency loan for Termoelectrica to be excluded from the budget. As the bonds were issued with a governmental guarantee, the state didn't waste time in covering Termoelectrica, thus avoiding sending negative signals to foreign markets had the reimbursement been delayed.
The company is the biggest state-owned entity to secure its financing from foreign loans.
Though the maturing term was well known, Termoelectrica did not contract a new foreign loan to pay back the bonds. It will do this, however, in the third quarter, when it is to raise money to secure fuel supplies for winter, within the guarantee limit settled with the IMF. It will be as late as this period that the money is returned to the state budget. Once again, state guarantees have proved to be quite a comfortable prospect, especially for the company's management. For the first time in the case of such an operation, the necessary foreign currency was bought from the inter-banking market.
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