Romania's insolvent Oltchim to layoff around a quarter of staff to prepare for 'haircut' before privatization

Around 900 employees in Romanian – state – owned and insolvent chemical producer Oltchim will be laid off starting next week, 600 of whom will be from the main company in Ramnicu Valcea, and 300 from a subsidiary near Pitesti. The number of people who need to be laid off is a maximum of 1,050, and was established based on the minimum amount that needs to be saved on salary costs, which is of EUR 1 million a month, according to Gheorghe Piperea, representative of the judiciary administrator. Those who will be laid off will receive compensation packages. Oltchim has over 3,300 employees. The chemical producer is due for privatization in September – October, and, according to the judiciary administrator, it would be preferable for the company to be bought together with the petrochemical platform near Pitesti. Oltchim will divide into two companies, with a first set to take over the debt of the chemical provider, and the second will start activity from scratch. “Debt will be partially canceled in a process called a haircut, within a reorganization plan which focuses on the payment plan. I can say that in large file, the recovery rate is between 25 and 30 percent,” said Gheorghe Piperea. The current level of debt is of EUR 793 million for Oltchim. A pre-condition to future buyers will be ensuring capital to bring production capacity to 65 percent, which means about EUR 50 million, and a second condition will be bringing management to the new unit, which will take over functional assets from the 'old' Oltchim, according to Piperea. Several investors have shown interest in Oltchim, such as Ineos Kerling and Fortissimo Capital, among others. Oltchim is currently functional at only 27 percent of its capacity, and the company has been under insolvency procedures since January 2013. The state – owned chemical procedure went through a failed privatization procedure last year, which was won my Romanian media owner and politician Dan Diaconescu, who however failed to pay the pledged EUR 45 million. editor@romania-insider.com