Romanian brick producer Cemacon sees first profit in three years after debt restructuring

Romanian brick producer Cemacon Cluj posted a 41% increase in sales in the first half of 2014, to EUR 6.14 million, on higher demand, and said its brick factory worked at full capacity. The company posted a net profit of EUR 510,000, its first positive result after three years, according to its half year report. In the first half of 2013, Cemacon had EUR 840,000 loss for a turnover of EUR 4.37 million. The company managed to improve its operating results, and posted an 87% higher EBITDA (earnings before interest, taxes, depreciation and amortization). It also managed to reduce its financing costs after signing an agreement with its main creditor, BCR, to restructure a EUR 26 million loan that it had taken in 2008, before the crisis to finance the construction of a new brick factory. The steep drop of the construction sector in Romania hit the company really hard as its sales strongly declined while its financial burden, generated by interests on the loan increased. Cemacon came close to insolvency, but managed to restructure after it changed shareholders and management. The new main shareholders, Finnish investment fund KJK, Romanian insolvency firm Casa de Insolventa Transilvania and brokerage firm Broker Cluj, which own 77% of the company, signed an agreement to support the same strategy for the company. They negotiated with BCR and managed to restructure the large loan by removing some non-core assets together with EUR 5 million of the loan and putting it on a new firm and by converting a part of the loan, some EUR 12 million, into shares. Business Capital for Romania Opportunity Fund Cooperatief UA, an investment vehicle controlled by BCR and Romanian businessman Florin Pogonaru, will hold up to 33% of Cemacon following this deal. Cemacon will still have to repay BCR some EUR 13 million, but will have grace period of one year. Cemacon is listed on the Bucharest Stock Exchange (BVB), trading with the ticker CEON. Its shares are currently suspended from trading until the capital increase will be registered. Cemacon's main competitors on the local market are Austrian group Wienerberger and Ceramica Iasi, which was recently bought by an investmenf fund from Hong Kong. Andrei Chirileasa, andrei@romania-insider.com