Romgaz and Termoelectrica sign debt for equity deal

Romgaz signed a deal with Termoelectrica to take majority stake in Iernut thermal power plant whereby the gas producer will cut its debt of 160 million lei, in a debt for equity swap approved by the Ministry of Economy.
Romgaz plans to build here a new natural gas-fired plant of 600 MW. The operations of the thermal power station in Iernut, Mures has been outsourced from a subsidiary of Electrocentrale Bucuresti into a station of Termoelectrica.

“This agreement is a win-win deal for both parties. This partnership will increase Romgaz’s credibility and subsequently, it will add new guarantees to the financial market. This agreement will contribute to a successful development and implementation of new cutting-edge eco-friendly technologies. Romgaz will develop its own efficient market for the natural gas output, while Termoelectrica will retool its stations, bringing new efficient equipment”, said Termoelectrica in an official statement.

Even since the early 2008, the board of Romgaz Medias notified Termoelectrica as well as the Ministry of Economy and Finance on Termoelectrica’s debt load to Romgaz.

Termoelectrica has sought other solutions to avoid default, such as state aid or direct talks with Romgaz Medias. In February 2008-April 2009, a round of intense talks was handled by the two parties (including the debt for equity swap proposed by Romgaz.

European Bank for Reconstruction and Development had approved a non-refundable loan of 450,000 euros for Termoelectrica, for the feasibility studies at Doicesti, Deva and Paroseni. For the moment, the company is running a selection process of consultant to conduct a feasibility study aimed to establish the capacity that the new group would have and the total coal output at Doicesti.

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