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The eBearing News
February 9, 2006
Rulmentul Brasov Privatization Offer Rejected
copyright © 2006 eBearing Inc.
AVAS, the Romanian Authority for State Assets Recovery -- announced it has now rejected the last
remaining offer for Rulmentul Brasov, the troubled state-owned bearing manufacturer producing
RBR and URB branded bearings.
This final offer was the second from a consortium formed by SC Industrial Group SRL Bucharest and SC Uzuc
SA Ploiesti. It was rejected, "due to the unsatisfactory price and way of request."
Over the two years Rulmentul Brasov has ostensibly been on the market for privatization, the few offers
received have been quickly rebuffed by AVAS for various, often unclear, reasons.
For example, after extending the bidding deadline many times, in November 2005 AVAS accepted proposals from the
Industrial Group - Uzuc partnership and another from Rulmenti Barlad. Both were almost immediately rejected,
one because it allegedly, "did not comply with the criteria," and the other
because the price was not high enough.
article: Rulmentul Brasov privatization attracts two bids
Now AVAS has rejected a second, more refined bid from the Industrial Group - Uzuc
consortium. Rulmenti Barlad dropped out of the bidding.
Several observers have told eBearing they believe AVAS is merely going through the motions, with no
intention of ever selling off Rulmentul Brasov or appearing to bow to IMF pressure.
Rulmentul Brasov's privatization is being forced under a package of International Monetary Fund reforms.
Early in 2005, the IMF reached agreement with Romania for a package of very
strict governmental and fiscal reforms. The IMF forced the situation because Romania had ignored or
been unable to meet so many IMF covenants, and that its economy was collapsing. The IMF said
"visible steps" must be taken to address widespread mismanagement and corruption in the government,
and its state-run programs and businesses.
The largest part of Romania's interest in meeting IMF rules is to keep in sight its
ultimate goal of joining the European Union. While Romania has many supporters in its
efforts, there are even more EU members who believe Romania's possible entry is still many years away.
Among the IMF reforms was an agreement that AVAS would privatize or shut down its three most
egregiously ill-managed and money-losing companies by the end of 2005 -- electrical equipment
maker Electroputere Craiova, tractor plant Tractorul Brasov, and
bearing manufacturer S.C. Rulmentul SA Brasov.
article: IMF cracks down on Romania; Rulmentul Brasov targeted
In fact, Rulmentul Brasov had been on the IMF's must-divest list since 2004, but no bidders surfaced.
Some believe this was due to overly-restrictive covenants, AVAS disinterest, and a general unwillingness to
expose the extent of the company's corruption and mismanagement.
AVAS also owns 50.8% of Rulmentul Brasov's shares.
In 2004, Ortadogu Rulman Sanayi (ORS, Turkey), showed interest in Rulmentul Brasov, but ORS walked away from
its USD $3.9 million bid after reportedly discovering the company holds a largely worthless bearing
inventory, an impossibly large workforce guaranteed jobs, and finding it would be forced to pay off massive debts,
unpaid bills and unpaid wages. Adding insult, Rulmentul Brasov's workforce participated in several
organized walkouts to protest ORS as Turkish-owned.
At one point AVAS did try to get INA interested in Rulmentul Brasov, when INA reviewed sites for a bearing
plant in the area. But INA declined and has built a separate plant in Brasov.
After waiting more than a year, in August 2005, AVAS finally put together a formal system for bidding on
Rulmentul Brasov, issuing a bid invitation announcement.
article: AVAS announces Rulmentul Brasov bidding, parameters
Bidding pre-qualification and other documents are available from AVAS, and the AVAS website. In addition,
the facilities of Rulmentul Brasov had been to inspection as was a "Data Room."
AVAS bidding documents at http://www.apaps.ro
Although AVAS has rebuffed all offers, the agency says it is still interested in
entertaining more. But, it said it will also, "analyze all possibilities," for the operation.
Founded in 1949, Rulmentul SA Brasov is Romania's largest bearing manufacturing facility. Under
the RBR and URB (Uzina Rulmentul Brasov) brands, the company manufactures ball bearings, linear
bearings, tapered roller bearings and needle roller bearings.
Brand names are difficult to distinguish, however. RBR as a brand is actually registered
by Rulmentul Barlad, the bearing factory in Barlad. URB, although it began as the brand for
Rulmentul Brasov, eventually became a common brand name available for use by all of Romania's
government-run bearing factories.
Actual financial and operating information is difficult to obtain for RBR. As examples, the
Romanian government has claimed employment was 5,200 at the same time RBR reported it stood at
more than 6,600. Similarly, the government reported RBR returned unspecified "massive" profits on bearing
sales of over USD $13 billion, while RBR computed sales at USD $4 million. Rulmentul Brasov, like many
state-run businesses, has used government funding to claim profitability; government loans are used to
pay day-to-day operating expenses, those loans are then immediately forgiven and "profits" ensue.
RBR has another mountain of debt built up that has not been
forgiven, but is ignored when presenting its finances.
The IMF has made no formal announcement regarding Romania's failure to meet its 2005 deadline for selling
off or closing Rulmentul Brasov.
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- by Bruce A. Carr
from individual research,
tips and commercial sources.
Unauthorized reproduction is prohibited.
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eBearing.com ... for everything that moves™
Entire contents Copyright 1999-2008, eBearing Inc. All rights reserved.
eBearing.com and "... for everything that moves" are registered
trademarks of eBearing Inc.
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eBearing.com ... for everything that moves™
Entire contents Copyright © 1999-2008, eBearing Inc. All rights reserved.
eBearing.com and "... for everything that moves" are registered trademarks of eBearing Inc.
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