Romania on Wednesday signed a deal to buy back shares in carmaker Daewoo Automobile Romania from its joint-venture partner, South Korea’s Daewoo Motor, opening the door for a new sale, economy minister Codrut Seres said.
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The government has been fighting for months to take over the 51% stake held by the bankrupt Daewoo Motor to free its hands in finding a new strategic partner for the plant, Reuters reported.
“After the transfer is finished and we obtain all the necessary approvals … we will restart the privatisation process,” Seres said during a signing ceremony.
Under the terms of the deal agreed in June, Romania will pay $51m for Daewoo Motor’s stake and $10m for debts stemming from past loans secured by the car maker.
Seres reportedly said it was not clear yet how large will be the stake put up for sale, adding a tender should be launched in 60 days after the share transfer is completed on 15 October.
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By GlobalData“We need to work out whether it (the stake) is 51%, 49%, 60% or 100%,” he said.
Last month, Seres told Reuters that price would not be a decisive criterion to win the bidding, but added the government wanted to get back money it would pay for Daewoo Motor’s stake.
Government sources have told Reuters that four companies had expressed an interest in taking over the plant — Ford, General Motors, Renault-Nissan Motor and China’s Chery Automobile.
In a statement, Ford said on Wednesday: ”We are very pleased that the Romanian government has reached this stage after much hard work, and we look forward to engaging further with them in the next phase.
“We have already declared our interest in the Craiova facility on several occasions. Following today’s signing of the financial agreement between the Romanian and South Korean institutions, we can confirm that we are definitely interested in acquiring the facility. Therefore, we will continue to develop our business plan, and be prepared to pursue due diligence when the government begins the privatisation process.
“Until a final decision is made on the privatisation and buyer, however, we will refrain from further comment.”
Reuters noted that Daewoo Motor put in capital worth $156m after forming a joint venture in 1994 with Automobile Craiova, which is controlled by the Romanian government.
The Korean firm had spent around $850m to upgrade the plant near the south-western city of Craiova, built in the late 1970s to produce Citroen-licensed cars under the Oltcit brand.
Seres also said the plant will keep producing cars under the existing licence, adding a new model should appear in the market in the next two years to keep up pace with stiff competition. The plant plans to produce 24,000 cars this year, mainly its best-selling small Matiz model.
Analysts reportedly say a new owner could increase the factory’s capacity of 100,000 vehicles per year.
Car production accounts for half of the plant’s turnover, while the other half comes from exports of engines and gearboxes to former Daewoo plants now owned by General Motors.
More than 140,000 engines and 193,000 gearboxes are expected to be produced in Craiova this year, well up from 43,000 and 117,000, respectively, in 2005, the firm has said, according to Reuters.
Renault, which dominates the local market with its no-frills Logan brand, plans to make more than 200,000 vehicles in Romania this year and around 350,000 in three years, the news agency noted.
