Another Romanian privatization ends in failure: CFR Marfa takeover cancelled without clear official reasons

It's official – the privatization of Romanian railway freight carrier CFR Marfa has failed - again. After a first privatization attempt earlier this year, the Government had managed to find a buyer, Grup Feroviar Roman, CFR Marfa's main competitor, who had won the bid, and had even wired a down payment. As with previous failed privatizations in Romania, which include Oltchim and CupruMin, the messages are now mixed on who's to blame and who blocked the process. The bid winner GFR, represented by its founder and main shareholder Gruia Sandu, said in a statement the company was called to the Transport Ministry yesterday (October 14) to be told that the privatization ended, as two procedures had not been fulfilled. As the privatization was not finalized, the contract GFR and the Romanian state had already signed will be cancelled. GFR will not need to pay the rest of the money. According to Sandu, some of the lenders of CFR Marfa did not agree to change the company's shareholder structure and the Competition Council did not have enough time to green light the takeover. The GFR owners has moved to rule out rumours that his company did not have the money to make the full EUR 202 million payment for 51 percent in the state company. He said the payment was the last step and previous steps in the privatization had not been fulfilled. “Should the Transport Ministry be willing to to give up on its confidentiality clause, you will see there is a pre-established order of steps to be made until the payment," Stoica said. "The payment from GFR was the last of these steps.”said Gruia. The deal was supposed to be finalized on Monday, October 14. So far, GFR has paid EUR 10 million as a guarantee, and a downpayment of EUR 20 million, or 10 percent of the value of the deal. Stoica blamed the privatization commission for not taking care of all the details and for not finding solutions in time and expressed his disappointment for how the whole process took place. The Romanian businessman said he was committed to pursuing the deal however: “If CFR Marfa will be up for privatization 100 times, I will submit an offer 100 times,” he said. And the company will soon be up for grabs again, as Transport Minister Ramona Manescu (in picture) said the privatization will re-start. It is still unclear however why this attempt failed, as both GFR and the Minister said the buyer could have paid the rest of the money. GFR now stands to lose the EUR 10 million guarantee, as the Ministry is still evaluating whether to keep that or not. Minister Manescu said the Ministry had fulfilled all of its requirements for this privatization. The lack of money to make the final payment was what ended the failed Oltchim privatization in 2012, when bid winner Dan Diaconescu failed to deliver on his promises. Another industry privatization, that of CupruMin ended without any clear reasons, and triggered a lawsuit from the bid winners Roman Copper. CFR Marfa is the largest railway freight carrier in Romania with a turnover of EUR 261 million in 2011 and a loss of EUR 22 million. GFR is CFR Marfa’s main competitor in Romania and the two companies together control 70 percent of the railway freight market in Romania.