ECONOMY

Romanian privatizations

BUCHAREST (Reuters) – Romania’s privatization agency, AVAS, wants to sell its remaining portfolio of mostly problem-ridden companies by the end of 2007, the head of the agency said. «We want to close the privatization (process) next year… we will make changes in the current laws that will allow us to accelerate the process,» Teodor Atanasiu told Reuters in an interview last week. AVAS is handling the privatization of around 1,000 firms, worth roughly 15 percent of the total share capital of state-owned companies in the Black Sea state set for European Union entry in 2007. The companies, many of them loss-making, have weighed on the government’s finances since the fall of communism. Its most attractive asset, a 53 percent stake in the country’s only state-owned drugmaker, Antibiotice Iasi, should be sold by the middle of next year, said Atanasiu, who recently took over his post after resigning as defense minister. The agency aims to sell 64 majority-owned companies and minor stakes in 387 firms next year. It plans to close 371 failing firms. So far this year, AVAS has sold 100 companies of the 120 planned. «There aren’t many attractive companies left in our portfolio. The attractive firms were already sold,» Atanasiu said. He said most of the companies still for sale are struggling with long-delayed restructuring and crumbling production lines that make it difficult for them to compete. «They have only two major advantages left, a skilled job force and… they are still a name on some markets. What they need is the chance to produce at market price. For this, you need investments,» Atanasiu said. Among the proposals Atanasiu will submit for government approval by the end of December is that AVAS will be able to negotiate the sale of a firm directly with the second-placed bidder if the winner pulls out, in an effort to avoid delays. Under current legislation, if the winning bidder drops out of the sale, AVAS must relaunch the privatization. Atanasiu also hopes to speed up the sale, through open auctions, of stakes smaller than 5 percent, which it holds in about one-third of companies in the portfolio. For listed companies, AVAS will sell its minor stakes on the bourse at that day’s price. Atanasiu also said the government might decide early next year to transfer to AVAS’s portfolio companies whose privatization has so far been handled by ministries such as Communications or Finance. Transfers may include the country’s 46 percent stake in phone operator Romtelecom, valued at up to 1 billion euros and a 51 percent stake in carmaker Daewoo Automobile Romania. The privatization of state-owned energy producers and distributors will be handled separately, Atanasiu said. Romania hopes to book a hefty price for its 53.02 percent stake in flagship company Antibiotice Iasi after the local pharmaceutical market gained momentum following two recent acquisitions of local drug companies by foreign buyers. Atanasiu also said Romania plans to launch the sale of three communist-era industrial plants early next year.