"Everybody believes Mondex has piled up state budget debts as aresult of the diving orders in the wake of the financial crisis,but starting April, the Sibiu-based firm has been practicallystifled by the high rents paid for stores in mall-type commercialspaces or commercial galleries in the country". This is how therepresentatives of Relco Active, the administrator of Mondex Sibiuexplain the insolvency of Romania's biggest producer.
With a 100-store network, the broadest in Romania, Mondex paidover 2m euros to retail space owners every year, according to ZF'scalculations. Against an 11m-euro turnover, rents account foraround 20% in Mondex' sales, almost 5% above what consultants saythe optimal threshold for a store should be.
Calin and Virgil Vircolacu, the company's two shareholders, areunwilling to provide more details about the company's restructuringprocess, stating they are in the phase where they are consideringany solution. The only ones that offered details about the processwere the representatives of Relco Active, the administratorappointed by the Sibiu Court of Law in Mondex's insolvencycase.
"We'll close 20-30 Mondex stores, where shopping gallery or mallowners will not cut rents, and we'll shift to other retail spaces.We'll give up the first Mondex stores in a matter of days. We'llfocus on Bucharest more as it's a solvent market and we'll boostexports," said Relco Active representatives.
Mondex shareholders filed for insolvency with the Sibiu Court ofLaw, as the company was in default, having accumulated debts ofaround 700,000 RON (over 166,000 euros) since April until now, notincluding banking loans.
"(...) From talks held with special administrator Calin BogdanVircolacu, the company will sell none of its assets," stated RelcoActive representatives. They also say they will draw up a finallist of receivables by January 2010 and plan to pay all accumulateddebts.
"We've so far managed to get most of the company's accountsunfrozen. (...) Mondex has banking contracts spreading over severalyears and a positive thing is the fact that banks have not putpressure on the company at the moment," said Relco Activerepresentatives.
Mondex had total debts of above 54.5m RON (around 13m euros) inDecember 2008, according to Finance Ministry data. In 2008, thefirm reported turnover worth 40.8m RON (11.6m euros) and profit of71,000 RON (17,000 euros).
"Keeping a company afloat is very difficult if one does not havethe support of state institutions. Mondex employees working inproduction will not be hurt, but part of Mondex store employeeswill be laid off," said Relco Active representatives.
They say reorganisation started on the 1st of September 2009."Creditors have agreed to further support us, and Mondex clientshave not lost their confidence in the company, even though it isgoing through one of the most difficult moments of its existence,"say Relco Active representatives.
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