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Rompetrol contemplates shutting down Petromidia refinery

Rompetrol Group contemplates shutting down the Petromidia refinery due to losses and unfavorable economic conditions, Rompetrol Chief Financial Officer Dmitry Grigoryev on Wednesday told a press conference.

'There are two variants. Either we keep the refinery, or the people. We are out of liquidities, we might default on payments to suppliers, banks, payrolls and that would be it. We do not have the capability to fully repay our debt because of the adverse economic reality. We are trying to find the best solution,' explained Grigoryev.

Rompetrol is currently negotiating with the Romanian authorities the repayment of its EUR 570 million debt. Rompetrol Group claims it would observe the terms set by the Romanian state for the payment of the debt, but says that it does not have any cash surplus, as the company's financial results were negative. Grigoryev said that Rompetrol Group bought back 71 million US dollars of the total debt of 570 million euros.

The Rompetrol official said that 1.7 billion U.S. dollars were invested to develop infrastructure and trade relations. Other plans also envisage the upgrading of the Petromidia refinery in an investment of 400 million US dollars. He added that Rompetrol pays 1.5 million dollars in annual taxes to the state budget.

Keeping the workforce in place is an important concern of the company now, in times of recession. 'If we look at oil prices, closing the refinery down appears as the preferable solution. (...) All the world's refineries now operate at loss. From the economic standpoint it would be better to import products from China, Korea and ship them to Romania. But the refinery needs to keep on working because we have employees,' said the Rompetrol official.

Between 2007 - 2009, Rompetrol Refinery posted 400 million US dollars in loss and invested 700 million dollars.The largest loan of the Romanian government to a private company, the Rompetrol Refinery bonds, reache maturity in September 2010.

In October 2003, the Government of that time swapped Petromidia's historical debt into bonds under an Emergency Ordinance; Rompetrol Group majority shareholder at that time was business tycoon Dinu Patriciu. In September 2007, Patriciu sold his stake to the Kazakh company KazMunayGaz.

The Ordinance issued in 2003 and the Law of 2005 enacting it leave issuer Rompetrol Refinery several options that include the conversion of the bonds into stock.

Also on Wednesday, the Romanian state lost the trial against Rompetrol Group that challenged the move of the authorities to lock the company's share capital increase by 450 million US dollars, lawyer Anna Diculescu Sova told a press conference.

'The state requested the suspension of the increase of the share capital increase by 450 million US dollars, an amount that was intended for the partial buyback of the bonds, ie exactly for applying the provisions of the law and repay the company's debt to the state,' said Ana Sova.

Rompetrol Refinery, a member of Rompetrol Group, registered in the first half of 2010 a net loss of 119 million dollars and a negative operating profit (EBITDA) of 24.7 million US dollars. The company's consolidated turnover was 1.76 billion US dollars, up 24 percent compared to the value recorded in the same period of 2009.

Sursa: http://www.agerpres.ro/

Tags: rompetrol refinery dollars state group petromidia million

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