Oltchim Ramnicu Valcea (OLT) chemical plant on September 5 will start negotiations to take over Petrochemicals Arges, the firm into which Petrom transferred the petrochemical operations of Arpechim Pitesti refinery, which is the main supplier of raw material to Oltchim.
Oltchim representatives maintain that in case an agreement is reached with Petrom on the takeover of Petrochemicals Arges, they are set to invest around 100m euros to boost the firm's production capacity from 200,000 tonnes of ethylene a year to 300,000 tonnes a year and to retool installations. Oltchim's general manager, Constantin Roibu, says the money needed to carry out the respective investments would be secured through loans.
"Retooling and boosting the production capacity of the pyrolysis installation are estimated to amount to 100m euros, with the money to be secured through loans. It will not be difficult for us to contract loans given that the acquisition of the new assets allows for the setting up of guarantees," stated Roibu.
Oltchim, a company part of AVAS' portfolio, is among the companies with the biggest debt volumes on the Bucharest Stock Exchange. At the end of June, the company's debts totalled 1.13bn RON (354m euros). Of the total debts, loans contracted by the company amounted to 640m RON (200m euros). However, Oltchim's manager is upbeat about the trend of the company's results, partly banking on the strong growth witnessed by the petrochemicals market in Central and Eastern Europe.
"We expect turnover to reach 600m euros this year and in 2008 we should generate 800m euros. We also expect profitability to rise, the more so as at the moment we take over Petrochemicals Arges we will secure raw materials at better prices and adequate quantities," specified Roibu.
Oltchim in the first half derived turnover worth 878m RON (266m euros), up 7.7% from the same period of last year, but slightly below the budgeted level. The company generated net income worth 9.61m RON (2.91m euros), up 32%.
"Petrochemicals consumption has increased considerably in Eastern Europe, with the growth pace coming to around 20-25% a year. Practically, at this moment, we cannot produce as much as we can sell," stated Roibu.
He also says Oltchim is well positioned on the East European market, being the only producer of PVC and polyols in the region.
Oltchim manager says the company could be ready for privatisation by mid-2008 if the EU accepts the proposal made by the Government regarding the annulment of the capital increase of 2003, through which the company's debt to AVAS was converted into shares, and the operation of another capital increase that should grant minority shareholders a pre-emption right.
Oltchim
Will start negotiations to take over Petrochemicals Arges on September 5
In case an agreement is reached, Oltchim is set to invest around 100m euros to boost the firm's production capacities from 200,000 tonnes of ethylene a year to 300,000 tonnes a year and to retool installations
Despite its high debt volume, is upbeat about the trend of its results given the rising petrochemicals consumption in Central and Eastern Europe
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