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Romania privatises freight rail amid controversy

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(Globalpost/GlobalPost)

A Romanian company was declared the winner Thursday of a controversial privatisation tender for the national freight rail transporter, a key condition for the country to renew its IMF credit line.

"We can now declare a winner, Grupul Feroviar Roman (GFR)," transport minister Relu Fenechiu told a press conference.

Fenechiu had previously said that GFR, the sole remaining candidate, had attached conditions to its bid, which he stressed was unacceptable.

But after lengthy negotiations, GFR "accepted to pay 904 million lei (202 million euros or $266,7 million) in one instalment," he added.

The starting price for the 51-percent stake had been set at 180 million euros.

The winner has two months to come up with the money.

Fenechiu stressed that GFR would invest an additional 200 million euros to modernise CFR Marfa.

GFR was the only company left in the running after a consortium of the Romanian firm TFG and Austrian investment fund Donau-Finanz pulled out Wednesday claiming it did not have enough time to conduct due diligence.

This followed the withdrawal on Monday of OmniTRAX, a US railway management group, which also contested the procedure.

Romanian Prime Minister Victor Ponta on Wednesday dismissed criticism of the tender procedures and stressed that Romania had to conclude the deal before an IMF board meeting due on June 26.

The sale of the heavily-indebted, loss-making carrier is one of the conditions set by the International Monetary Fund under its precautionary 3.5-billion-euro ($4.7-billion) credit line that expires at the end of this month.

Romania's government has indicated it wants to negotiate a new agreement with the IMF later this year, although no amount has yet been mentioned.

The tender for CFR Marfa was relaunched last month after a first attempt failed when the same three companies were judged by the transport ministry as not having met the conditions for the sale.

CFR Marfa employs 9,000 people. In 2011 it posted a net loss of 93 million lei (20.6 million euros) on sales of 1.1 billion lei.

at-mr/rl

http://www.globalpost.com/dispatch/news/afp/130620/romania-privatises-freight-rail-amid-controversy