MIRA INFORM REPORT

Report No. :	311016
Report Date :	12.03.2015

IDENTIFICATION DETAILS

Name :	OLTCHIM SA
Registered Office :	Valcea county / 240050 Ramnicu Valcea – Uzinei Street No. 1
Country :	Romania
Financials (as on) :	30.06.2014
Year of Establishments :	1966
Legal Form :	Joint Stock Company, Romanian State and Private Capital
Line of Business :	· according to the national Trade Registry Updated Files, subject is a manufacturer of other Basic Organic Chemicals According to the Company’s Web-Site, subject is a major producer in the Chemical Industry in Central and Eastern Europe. Subject product ranges includes:- Inorganic Products Macromolecular Products Organic Synthesis Products
No of Employees :	2,288 (30.06.2014)

RATING & COMMENTS

MIRA’s Rating :

Ca

RATING		STATUS	PROPOSED CREDIT LINE
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security

Status :	Moderate
Payment Behaviour :	Slow
Litigation :	Clear

NOTES :

Any query related to this report can be made on e-mail : infodept@mirainform.com while quoting report number, name and date.

ECGC Country Risk Classification List – December 31, 2014

Country Name	Previous Rating (30.09.2014)	Current Rating (31.12.2014)
Romania	B1	B1

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

Romania ECONOMIC OVERVIEW

Romania, which joined the EU on 1 January 2007, began the transition from Communism in 1989 with a largely obsolete industrial base and a pattern of output unsuited to the country's needs. The country emerged in 2000 from a punishing three-year recession due to strong demand in EU export markets. Domestic consumption and investment fueled strong GDP growth, but led to large current account imbalances. Romania's macroeconomic gains have only recently started to spur creation of a middle class and to address Romania's widespread poverty. Corruption and red tape continue to permeate the business environment. As a result of the global financial crisis, Romania signed on to a $26 billion emergency assistance package from the IMF, the EU, and other international lenders. GDP contracted from 2009 to 2011. In March 2011, Romania and the IMF/EU/World Bank signed a 24-month precautionary stand-by agreement, worth $6.6 billion, to promote fiscal discipline, encourage progress on structural reforms, and strengthen financial sector stability. In September 2013, the Romanian authorities and the IMF/EU agreed to a follow-on stand-by agreement, worth $5.4 billion, to continue with reforms, although Bucharest announced that it does not intend to draw funds under the agreement. Economic growth accelerated in 2013, driven by strong industrial exports and an excellent agricultural harvest; in December 2013 inflation dropped to a historical low annual rate of 1.6%; and the current account deficit was reduced substantially. Yet, progress on structural reforms is uneven and the economy still is vulnerable to shocks.

Source : CIA

Company summary

COMPANY UNDER THE INSOLVENCY LAW
NAME OF THE COMPANY	OLTCHIM SA
Address	Valcea county / 240050 Ramnicu Valcea – Uzinei Street No. 1
Phone no.	0040-250-701200	Fax no.	0040-250-735030, 736188
Web-site	www.oltchim.ro	E-mail address	oltchim@oltchim.ro

HISTORIC/OFFICIAL DATA

Date of foundation

1966, with the name of “Chemical Works Ramnicu Valcea” by Minister Council Decision 1046/26.05.1966. The first plant, Mercury Cells Electrolysis, was commissioned on 28 July 1968.

Until 1990 it was acting as a State enterprise called “Combinatul Chimic RAMNICU VALCEA”.

By the Governmental Decision no. 1213/20.11.1990, based on the Law 15/1990, the subject became a joint stock company, entirely State capital, named OLTCHIM SA

Present legal form

joint stock company, Romanian State and private capital

Registered with the Trade Registry

J38/219/1991

VAT no.

1475261

Legal status

Under the insolvency procedure (according to Law 85/2006, Government Ordinance 91/2013 and Law 85/2014)

According to the Romanian justice portal (http://portal.just.ro), to the National Trade Registry updated files and to the BSE (Bucharest Stock Exchange):

- on 25th of January, 2013 it is registered with the Valcea Court (the 2nd Civil Section) the file no. 887/90/2013 regarding the opening of the insolvency procedure of OLTCHIM SA, on its own request;

- on 30th of January, 2013 the Court decides the opening of the insolvency procedure and admites the appointment of a Consortium of two judicial administrators, namely BDO BUSINESS RESTRUCTURING SPRL and ROMINSOLV SPRL, Romanian legal persons, specialists in insolvency;

- on 14th of March, 2013 the OLTCHIM’s General Meeting of Shareholders decides to appoint the special administrator during the insolvency procedure, namely Mr. Stanescu Nicolae Bogdan Codrut;

- from March 2013 until now, the Court decided several delayes, without issuing any formal decision;

- on March 9th, 2015, the OLTCHIM’s General Meeting of Shareholders aproved the Reorganization Plan of the company proposed by the Consortium of the two judicial administrators;

- the next hearing with the Court is appointed on March 25th, 2015 for continuing the procedure; the Reorganization Plan will be also subject of the Court approval.

No further details are available so far.

Registered capital

34,321,138.3 RON

Shareholders

Individuals

1. List of individuals, not detailed with the National Trade Registry updated files

Participation

17.90%

Legal persons

2. Romanian State, through the Ministry of Economy

Address: Bucharest, sector 1 – Calea Victoriei No. 152

Participation

54.81%

3. List of other legal persons, not detailed with the National Trade Registry updated files

Participation

27.29%

Obligation to publish

According to the Romanian Financial Legislation, subject company is obliged to lodge with the Ministry of Public Finance its half-yearly accounts

EMPLOYEES

2009

2010

2011

2012

2013

30.06.2014

total

3,468

3,570

3,447

3,318

2,744

2,288

BUSINESS ACTIVITY

- manufacture of other basic organic chemicals, according to the national Trade Registry updated files (NACE: 2014)

According to the company’s web-site

OLTCHIM is a major producer in the chemical industry in Central and Eastern Europe.

Over time, OLTCHIM has proven technological flexibility and ability, backed by over 45 years of research and innovation, to provide competitive products.

Premises of OLTCHIM location:

· Existence, in the area of multiple mineral resources: salt, limestone, oil and gas, coal. Salt is the basic raw material for the chemical site technologies; salt deposit, located at approx. 8 km away, has an estimated operating reserve for about 100 years.

· There is an important source of water, the Olt River at a distance of 0.7 km.

· Close sources to supply ethylene and propylene, the main raw materials for OLTCHIM products through two underground pipelines 60 km in length each.

· Easy access to road transport routes and railways - Direct connection to ports on the Danube and the Black Sea.

Products

Inorganic products

Macromolecular products

Organic Synthesis products

The OLTCHIM’s production goes in an important proportion to export. In the first half of 2014, 69% of production went to export, while 31% went to the domestic market.

The main areas for exports are: the European Union (44%) and Middle East, including Turkey (25%)

In January 2010, OLTCHIM has completed the acquisition of petrochemical assets of Arpechim from OMV Petrom (Arpechim is a petrochemical platform which was acting as a subsidiary of OMV Petrom).

The petrochemical activity of Arpechim Platform was designed since the beginning to function as an integrated system with the OLTCHIM’s activity. Products manufactured with the assets acquired from ARpechim are raw materials for certain OLTCHIM products.

Financial problems caused by inability to restart the integrated activity with Arpechim led to the OLTCHIM's entry in the insolvency procedure since January 30th, 2013 (see above, with the “Legal status” chapter).

The reorganization of the company’s activity, after entering the insolvency procedure, began to take effect, OLTCHIM increasing monthly the operating level of production capacity, currently reaching the balance point, meaning that the monthly operating revenues cover all operating expenses, less depreciation.

The company is certified according to quality standards and environmental ISO 9001/2000 and ISO 14001/2004, by TUV Management Service.

Products produced by OLTCHIM have a wide range of applications such as in: the oil industry, petrochemical, aluminum, pulp and paper, in detergents, soap obtaining the manufacture of dyes, pharmaceuticals, cosmetics, plastics industry rubber, electrical and electronics industries, the footwear, plastics, furniture, automotive and others.

On Wednesday, December 17, 2014, the ANEIR Gala 2014 was held in Bucharest, organized by the NATIONAL ASSOCIATION OF EXPORTERS AND IMPORTERS OF ROMANIA (ANEIR) in partnership with NBR (national Bank of Romania), an event attended by Mr. Mugur Isarescu, Governor of NBR and Mr. Nicolae Vacaroiu, President of the Court of Accounts.

Under this event, OLTCHIM received the ANEIR TROPHY FOR EXCELLENCE as the largest exporter of chemicals in Romania in 2014.

This award confirms the company's special collaboration with its partners and its continuous efforts to develop high quality products for its customers. Over time, these efforts have strengthened the leadership position of OLTCHIM on the Central and Eastern European market among the producers of polyether polyols and caustic soda.

The ANEIR Gala gives annual awards to the most powerful companies in Romania, based on the export performances provided by the National Statistics Institute (…).

For more details, please do visit www.oltchim.ro

Work-shops

1. Bucharest, sector 2 – Vasile lascar Street No. 5-7

2. Valcea county / Mihaesti commune (no further details are available)

3. Valcea county / Babeni (no further details are available)

4. Arges county / Bradu commune – Petrochimistilor Street No. 3

TRADING INFO

The company’s shares were quoted with the Bucharest Stock Exchange, since February, 1997 (symbol: OLT) and until 30.01.2013, when their trading was suspended following the Valcea Court decision of opening the insolvency procedure.

OTHER PARTICIPATION

1. Company’s participation

EURO URETHANE SRL – J38/620/2004, VAT 16569330

OLTQUINO SA – J38/1560/1994, VAT 6624976

PROTECTCHIM SRL – J38/141/2003, VAT 15249523

SISTEMPLAST SA – J38/71/1999, VAT 11438007

2. Shareholders other participation

1. List of individuals

not applicable

2. Romanian State, through the Ministry of Economy

To other over 70 Romanian companies

3. List of other legal persons

not applicable

REAL ESTATE (RON)

- lands & buildings

2009

2010

2011

2012

2013

213,562,319

475,767,124

564,322,662

552,722,943

473,375,714

TANGIBLES*

1,121,486,338 RON, at 30.06.2014

*According to the accounting standards, for the middle of the year the company is not obliged to detail its tangible assets. Therefore, the real estates are included in “Tangibles” position among the other assets

BANKS

Romanain Commercial Bank, Transilvania Bank, Alpha Bank, CEC Bank

MANAGEMENT

· as officially registered with the National Trade Registry

· other executives, according to the company’s web-site

Judicial administrators

BDO BUSINESS RESTRUCTURING SPRL – Romanian legal person, specialist in insolvency

Address: Bucharest, sector 3 – Invingatorilor Street No. 24, “Victory Business Center”

Appointed on 13.05.2013

ROMINSOLV SPRL – Romanian legal person, specialist in insolvency

Address: Bucharest, sector 3 – Splaiul Unirii No. 223

Appointed on 13.05.2013

Special administrator

Mr. Stanescu Nicolae Bogdan Codrut – Romanian citizen, born on 8.09.1974

Appointed on 14.03.2013

Mr. Danut Victor Avram Deputy General Manager

Mr. Mihail Talpasanu Production Manager

Mr. Laurentiu Armand Spiru Ciobescu Commercial Manager

Mr. Alin Ion Smeu Economic Director

Mrs. Dana Maria Munteanu HR Manager

Mr. Marius Pirvu Petrochemical Division Manager

CURRENCY

Exchange rate of EURO

1 EURO = 4.2282 RON on 31.12.2009

1 EURO = 4.2848 RON on 31.12.2010

1 EURO = 4.3197 RON on 31.12.2011

1 EURO = 4.4287 RON on 31.12.2012

1 EURO = 4.4847 RON on 31.12.2013

1 EURO = 4.3888 RON on 30.06.2014

FINANCIAL DATA: RON

BALANCE SHEET	31.12.2012	31.12.2013	30.06.2014
INTANGIBLES - TOTAL	2,441,900	3,731,332	3,297,952
TANGIBLES - TOTAL	1,745,548,048	1,189,675,048	1,121,486,338
FINANCIALS - TOTAL	25,430,032	53,998,974	53,998,974
FIXED ASSETS - TOTAL	1,773,419,980	1,247,405,354	1,178,783,264
STOCKS - TOTAL	67,827,168	37,739,430	28,584,122
CLAIMS - TOTAL	81,822,728	76,641,179	56,770,165
CURRENT ASSETS	151,400,307	119,672,694	88,803,516
PREPAID EXPENSES	3,903,765	7,447,523	7,303,946
DEBTS WITHIN 1 YEAR	3,275,159,407	3,610,827,490	3,629,980,742
DEBTS OVER 1 YEAR	175,894,130	51,858,238	47,716,916
PROVISIONS	0	0	0
ADVANCED INCOMES	0	0	0
SHARE-CAPITAL	34,321,138	34,321,138	34,321,138
ADJUSTMENTS of share-capital, suite of IFRS	983,978,671	983,978,671	983,978,671
RESERVES from reassessment of the fixed assets	0	213,863,943	213,863,943
RESERVES	14,832,956	14,832,956	14,832,956
LOSSES CARRIED FORWARD	1,986,018,773	2,588,289,675	3,535,292,636
RETAINED EARNINGS, suite of IFRS	0	0	0
NET RESULT - PROFIT	0	0	0
NET RESULT - LOSS	569,443,477	946,867,190	114,511,004
NET WORTH	-1,522,329,485	-2,288,160,157	-2,402,806,932
PROFIT & LOSS ACCOUNT	31.12.2012	31.12.2013	30.06.2014
Turnover	760,603,798	497,955,215	271,039,127
Own production & services	717,233,894	470,892,113	257,766,555
Sales	43,369,904	27,551,196	13,447,585
INCOMES FROM ORDINARY OPERATING ACTIVITY	748,252,214	497,814,290	274,305,929
Raw materials	386,211,175	243,708,947	140,499,428
Costs of goods sold	36,529,198	22,828,438	12,669,116
Wages	154,481,934	195,988,105	58,762,456
Depreciations & provisions	115,621,363	104,108,962	73,243,914
Other operating costs	164,568,696	701,279,080	20,496,926
COSTS OF ORDINARY OPERATING ACTIVITY	1,082,961,765	1,463,740,973	383,109,516
ORDINARY OPERATING RESULT - PROFIT	0	0	0
ORDINARY OPERATING RESULT - LOSS	334,709,551	965,926,683	108,803,58
FINANCIAL INCOMES	51,746,423	100,097,828	892,810
FINANCIAL COSTS	288,705,417	106,245,794	6,600,227
FINANCIAL RESULT - PROFIT	0	0	0
FINANCIAL RESULT - LOSS	236,958,994	6,147,966	5,707,417
TOTAL INCOMES	799,998,637	597,912,118	275,198,739
TOTAL COSTS	1,371,667,182	1,569,986,767	389,709,743
PRETAX RESULT - PROFIT	0	0	0
PRETAX RESULT - LOSS	571,668,545	972,074,649	114,511,004
TAX ON PROFIT	0	0	0
INCOMES FROM DEFFERED TAX ON PROFIT	2,225,068	25,207,459	0
NET RESULT - PROFIT	0	0	0
NET RESULT - LOSS	569,443,477	946,867,190	114,511,004

N.B.: any difference occurred between former reports and the present one regarding some positions of the “Balance Sheet” or P/L Account for previous periods does not belong to us.

The financial data from this report are the ones officially declared by the subject with the Ministry of Public Finance data basis for 30.06.2014. As consequence, the responsibility for their accuracy belongs exclusively to the company.

OUR OPINION

based upon financial figures reported in the latest balance-sheet – 30.06.2014

- all figures are reported in RON if otherwise not specified.

Size

large, considering the total no. of employees.

Position & trend

Very well-known company in its line of business in Romania and abroad, very well-experienced (almost 50 years), with a solid background.

According to all the data at hand, the company is facing some problems for quite a while, which led to the application to open insolvency proceedings.

Currently, OLTCHIM is passing theese proceedings and a Reorganization Plan was just issued (2 days ago) in order to be approved by the Court.

As the available financials reveal, the volume of activity is still very large, despite the certain decreases registered since 2012.

The returns stand negative, as well as the net-worth, meaning the company is confronting to bad funding problems, being totally addicted to the borrowed sources.

Considering all the above mentioned, we do appreciate any contemplated business transaction has to be fully secured.

The business evolution should be monitored.

31.12.2009

31.12.2010

31.12.2011

31.12.2012

31.12.2013

30.06.2014

Turnover

RON

1,077,518,784

1,309,544,085

1,533,016,194

765,442,904

497,955,215

271,039,127

EURO

254,841,016

305,625,487

354,889,505

172,836,928

111,034,231

61,757,001

Gross profit

RON

-209,858,543

-223,283,641

-278,342,623

-571,668,545

-972,074,649

-114,511,004

EURO

-49,633,069

-52,110,633

-64,435,637

-129,082,698

-216,753,551

-26,091,643

Net profit

RON

-209,887,210

-223,315,891

-278,342,623

-569,443,477

-946,867,190

-114,511,004

EURO

-49,639,849

-52,118,160

-64,435,637

-128,580,278

-211,132,783

-26,091,643

30.06.2014

CREDITS & LOANS (ACTIVE BALANCE)

1,823,128,754

Bank credits & afferent interest, on short term (within 1year)

574,674,281

Bank credits & afferent interests, on medium term (over 1year)

47,716,916

Other financial loans & afferent interests, on short term (within 1year)

1,200,737,557

BALANCE CLAIMS-DEBTS

Total claims

56,770,165

clients & trade debtors

39,579,030

Total debts

3,677,697,658

- Short term

3,629,980,742

suppliers & trade creditors

1,574,729,639

bank credits & afferent interests

574,674,281

other financial loans & afferent interests

1,200,737,557

to the Social Insurance

59,636,017

to the State Budget

84,892,690

other debts

26,249,465

- Medium term

47,716,916

bank credits & afferent interests

47,716,916

PAYMENTS BEHAVIOR

Slow

Total overdue of 12.52 times higher than the turnover itself! (93.54% of total short term debt)

3,395,581,098

To suppliers, 88.41% delayed

1,392,178,633

over 30 days

19,475,959

over 90 days

43,206,451

over 1 year

1,329,496,223

To the Social Insurance

55,696,284

To the State Budget

10,599,238

To the special funds

145,348

To other creditors

1,428,825,356

Outstanding bank credits, over 1 year delayed

508,136,239

PAYMENTS INCIDENTS, as

officially recorded with the Payment Incident Bureau

No incidents recorded in the period 11.03.2014 – 11.03.2015

BLACKLISTING (international sanctions)

Not applicable

FINANCIAL STRENGTH

Negative

BUSINESS RELATIONS

Under secured terms

2009

2010

2011

2012

2013

30.06.2014

Constant unsatisfactory, very low

Liquidity analysis

- current ratio

0.37

0.33

0.21

0.05

0.03

0.02

- quick ratio

0.25

0.19

0.14

0.03

0.02

0.02

Solvability analysis

Constant unsatisfactory, negative equity

- the borrowing ratio (total debts/net worth)

-4.08

-4.19

-3.07

-2.27

-1.60

-1.53

Profitability analysis (%)

Constant unsatisfactory, consecutive losses

- return on capital

loss

loss

loss

loss

loss

loss

- return on assets

loss

loss

loss

loss

loss

loss

- gross profit margin

loss

loss

loss

loss

loss

loss

Activity analysis

Bad funding problems! Business which depends totally on the borrowed sources (commercial credit and not only)

- debtor’s days

64

59

51

41

56

38

- creditor’s days

115

125

196

639

1056

1046

Stocks turnover, times/period

9

8

15

11

13

9

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.62.75
UK Pound	1	Rs.94.60
Euro	1	Rs.67.09

INFORMATION DETAILS

Analysis Done by :	DIV
Report Prepared by :	MNL

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
--	NB	New Business	--

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions

This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.