Hidroelectrica, back to insolvency

The state-owned company is again insolvent following the decision of the Bucharest Court of Appeal which admitted the appeals of the energy traders Hidroelectrica cooperated with, Remus Vulpescu, its former insolvency special administrator, announced yesterday.

Proprietatea Fund (FP), the minority shareholder of the hydro energy producer, confirmed Vulpescu’s assertion: “The Bucharest Court of Appeal annulled the initial decision of the Bucharest Tribunal through which the judicial reorganization of Hidroelectrica was closed on procedural grounds. Consequently, the case will be sent to the syndic judge for retrial. Hence, the company resumes the reorganization, and the former judicial administrator is reinstated with immediate effect”, is stated by an informing.

Under these circumstances, Hidroelectrica’s Supervisory Board will be dismissed and Remus Borza, the former administrator and head of the Supervisory Board during insolvency, will be reinstated.

This decision has a negative impact on the privatization strategy since the Ministry of Economy, which controls Hidroelectrica through the Department for Energy, aimed to run this summer an initial public offering for listing the company on the Bucharest Stock Exchange, as well as on the London Stock Exchange.

Vulpescu commented on this subject on Digi24, saying that the privatization schedule will not stand given the situation: ”Returning to insolvency means that the listing on the Bucharest and London stock exchanges in 2014 cannot be considered any longer, at least not as per the initial schedule agreed with the International Monetary Fund and with the large foreign investors”.

Hidroelectrica became insolvent in June 2012, ending the judicial reorganization one year later, on June 26, 2013, based on the decision of the Bucharest Tribunal. Yet, it was not a final decision, allowing the appeal admitted yesterday.