BR Awards 2014 – The Nominees: Best Turnaround Strategy

Newsroom 05/03/2014 | 13:42

Judging criteria: strategy employed to achieve turnaround; time taken to achieve it; financial results of the company before and after.


Hidroelectrica, the hydroelectricity generator, exited insolvency last June after 371 days in which the trustee freed the company of loss-making power supply contracts with the “wise guys” of the energy sector. Remus Borza, the insolvency trustee, said at the time that Hidroelectrica’s filing for insolvency on June 20 2012 had proved to be a “wise choice”. Daniel Chitoiu, finance minister, added that the company had reported losses of around EUR 1 billion in May 2012, because of the bilateral supply contracts.

Hidroelectrica’s insolvency had opened a path to other companies that want to restructure and to increase their economic efficiency, said Borza, owner of Euro Insol, the insolvency firm. The state-owned company recorded a gross profit of RON 399 million (EUR 90 million) in the first five months of 2013, from a loss of RON 190 million (EUR 42 million) in the same period of the year before. Meanwhile, the turnover gained 22 percent to RON 1.2 billion (EUR 270 million) in the same period.

Hidroelectrica’s insolvency was a shock for the banking sector, which has exposure of close to EUR 500 million in the company.

Since August 2012, the company has paid EUR 1 million on a monthly basis for a loan taken out from RBS Romania. It has paid USD 4 million on a quarterly basis since the third quarter of 2012 for a loan taken out from Citibank. Hidroelectrica has also begun repayments on loans granted by BRD and ING Bank. The Ministry of Economy has an 80 percent stake in Hidroelectrica, while the Property Fund holds 19.5 percent of the shares.

Blue Air

In spring 2013, Airline Management Solutions, a newly set up firm owned by four Romanians, acquired low-cost carrier Blue Air for EUR 30 million, out of which EUR 28 represented the takeover of obligations. The new owners’ plans for the airline last year included the consolidation of the business at 2012 levels and the addition of new aircraft to the company’s fleet. The new management team also aims to grow the business by 3 to 5 percent in the coming years.


With 220 employees and 25 stores in 19 cities, Diverta looked to break even in 2013, improve the company’s operational result from negative to positive and exit insolvency. The strategy deployed to reach these objectives entailed decreasing the sales area in top stores by over 30 percent, refreshing the product lines, upgrading the retail concept by redesigning the most important stores in the network, increasing service levels and concentrating the communication effort on CRM. In 2013, after four years of negative results, the company reached a positive EBITDA of EUR 100,000 compared to minus EUR 300,000 in 2012. The company increased its sales per sqm by 35 percent, to reach EUR 1,375.

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