The remaining assets of Rulmentul Brasov (Romania, state-owned) will be auctioned off, either as a whole or in parts as necessary, at two auctions set for April 16 and April 23.

This is essentially a lowered-expectations repeat of the auction run by RVA in December.
auction document [PDF format]
The Romanian State Assets Recovery Authority (AVAS) has finally given up its years-long effort to possibly sell off the former state-run bearing manufacturer -- as a going company, or just the assets as one lot, or possibly to another manufacturing company, or simply for property development. Every effort so far has failed.

Rulmentul Brasov was shut down in April 2007 and removed from the Bucharest Stock Exchange. An asset liquidation was supposed to happen shortly thereafter, but officials managed to skirt international pressure for some time and repeatedly delayed the effort.

article: Rulmentul Brasov shut down by Romanian authorities
Initially -- more than a dozen auction efforts ago -- the asking price had been set at €70 million. But by the middle of 2008, the number was €35 million. At that price, the 2008 auction round brought interest from nine companies. However, none actually bid.

In the December 13 auction, the entire lot was apparently under sale agreement to Resort Tampa SRL, at a lowered €35 million starting bid. Resort Tampa put together a plan which would have scrapped, razed and cleared every Rulmentul Brasov property, then built a high-end resort hotel and spa complex on the land. However, Resort Tampa was unable to raise any funding to back its bid, and the deal is officially considered as abandoned.

Now, the same bankruptcy liquidation specialist will try again to sell off Rulmentul Brasov as one collection of assets -- real estate, buildings, machinery, tooling, and whatever other assets might remain.

Failing that effort, the assets will be auctioned off piecemeal. Beyond the bearing manufacturing operations, plant and equipment, bids in the upcoming auctions are being taken for individual pieces of real estate -- including the cafeteria building, a relatively modern but unfinished factory, and a recreation center with bowling alleys.


History


Founded in 1949, Rulmentul SA Brasov was Romania's largest bearing manufacturing facility. Under the RBR and URB (Uzina Rulmentul Brasov) brands, the company manufactured ball bearings, linear bearings, tapered roller bearings and needle roller bearings.

In actual use, however, the use of brand names was murky. 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.

Although Rulmentul Brasov had once been a reasonable facsimile of a bearing manufacturing business, in recent years it had been little more than a state-funded make-work exercise. Eventually, more than 3,000 people bloated its payroll, but were counted as "employed," occupied, and off unemployment rolls.

More than 2,250 workers eventually lost their jobs in 2007, but received a relatively generous compensation package by Romanian standards. Each received a cash payment, equivalent to twice the average salary in Romania, along with guaranteed severance pay for two years.

Rulmentul Brasov repeatedly accumulated staggering government-funded debts -- despite having its entire debt load "forgiven" over and over again. In 2006, for example, its final full year of operations, Rulmentul Brasov sales dropped 10% to RoN 114.6 million (USD $46 million), while operating losses topped RoN 40.6 million ($16.5 million). Despite a recent full writeoff, accumulated government-backed debt had once again topped RoN 250 million ($95 million).

Keeping Rulmentul Brazov open, Romania had for years been violating both European Commission and International Monetary Fund directives to close its worst state-supported businesses. The EC and IMF both instructed that the very worst of the very worst -- Rulmentul Brasov -- must be sold or shuttered by the end of 2005. Romanian authorities managed to skirt the edict with paperwork and token efforts, primarily seeking to avoid the apparent jump in unemployment. But as a result, the country finally faced severe sanctions from the EC and IMF if Rulmentul Brasov was not shuttered by the end of 2007.

To save face, Rulmentul Brasov's 2007 shutdown order was justified by AVAS as coming after an internal evaluation of all state-run businesses in its portfolio. Even in that highly forgiving analysis, only 10% rated a fate better than bankruptcy. Few, if any, showed potential for interest from actual privatization investors.

The Rulmentul Brasov closing came as another blow to the Brasov region, also home to Tractorul, the state-run tractor maker which was shut down and put 2,000 workers on the street.

Workers from both Rulmentul and Tractorul walked off the job to both protest the closings press for better severance packages. Prime Minister Popescu Tariceanu said at the time, "there is no solution" for the troubled companies.

Since 1992 in Romania, more than 10,000 state-run companies have been privatized, and over 9,000 more are bankrupt. There are a few hundred in the Privatization Authority's inventory, and it has been making a strong push to sell off the assets to satisfy the EU and IMF.

Deeply rooted problems made Rulmentul Brasov the worst and most troubled of the state-run businesses. It attracted no serious outside interest in several years. The workforce has a history of instability and walkouts, protesting whenever a buyer would show any interest.

Several knowledgeable observers have told eBearing the onerous terms for taking over Rulmentul Brasov had been another problem. They required, for example, maintaining the massively bloated workforce rolls, offering opulent benefits packages, paying off its accumulated debt, swallowing a massive and near-worthless finished goods inventory, and other expensive legacy problems. Other issues were its "hopelessly antiquated" facilities, rampant safety and environmental issues, a poorly trained and unmotivated workforce, unhappy customers, lack of guaranteed government sales contracts, and myriad other smaller issues.

In 2005, the EU found Romania's massive and continuing financial support of Rulmentul Brasov put the country in violation of several EU trade and government support covenants, and the IMF took the same position. Although the IMF declared Rulmentul Brasov must be sold by the end of 2005 in order to avoid sanctions, the country made some passing efforts and no sanctions were ever enacted.

eBearing has been tracking the developments in a series of articles:

2005 article: IMF cracks down on Romania, targets Rulmentul Brasov

2005 article: Rulmentul Brasov acquisition terms and conditions set

2005 article: Rulmentul Brasov attracts two bidders

2006 article: Romania rejects last remaining bid for Rulmentul Brasov

2006 article: Rulmentul Brasov privatization effort put on hold

2007 article: Rulmentul Brasov likely to close; workers stage walkout

2007 article: Rulmentul Brasov shutdown officially announced