February 23, 2018 / 5:44 PM / 22 days ago

Romania's Chimcomplex plans expansion drive after acquisition

BUCHAREST (Reuters) - Romanian chemicals producer Chimcomplex ROCHOB.BX plans to build on its acquisition of rival Oltchim to boost turnover to roughly 300 million euros ($369 million) by 2020, its board chairman Virgiliu Bancila said on Friday.

Oltchim ROOLT.BX was forced into insolvency in 2013 after suffering from the closure of a petrochemical refinery, outdated infrastructure and poor management. Its court-appointed manager put its assets up for sale last year.

Chimcomplex, which has a market capitalization of 376 million lei ($100 million) and is among the largest privately-owned Romanian chemical plants, won the auction for six assets for 127 million euros before value added tax.

Bancila estimated the acquisition would be finalised by early July at the latest.

“From that very moment we will start to use the assets and integrate them into Chimcomplex,” Bancila said. “We have an investment plan estimated at 70 million euros for the first three years.”

The goal is to create an integrated chemicals maker modeled after regional firms such as Poland’s Grupa Azoty, and revive Romania’s chemical industry.

Oltchim’s total turnover - including its other assets - was 969.9 million lei in 2017, while Chimcomplex, which has yet to release full-year results, posted turnover of 115.37 million lei for the first half of 2017.

The firms’ flagship products are chlorosodics, which are used to make soaps, pesticides and plastics, and polyether. Chimcomplex currently exports around 60-65 percent of its output to Moldova, Ukraine, Turkey, Israel and other states, said Bancila, who predicts domestic consumption will rise.

“We are at a stage where Romania imports large quantities of chemical products,” he said. “There is more than enough market for our products ... and there is enough room to raise production.”

Bancila said the company would embark on an ambitious development and expansion program from 2020, with the goal of boosting turnover to more than 650 million euros within five years.

The expansion would be driven by relaunching Oltchim’s production of polyvinyl chloride (PVC), which will require investment of up to 300 million euros. Chimcomplex was also analyzing the possibility of merging with or acquiring chemical fertilizer plants currently in insolvency.

Bancila said the company could consider raising capital on the bourse after 2020 to help finance its investments.

“After the IT sector, Romania’s chemical industry has the second-largest growth potential,” Bancila said. “It has the all resources, energy, gas, minerals, industrial platforms, labor force and plenty of market, what more could it need?”

Reporting by Luiza Ilie; Editing by Mark Potter

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