The Tractorul platform is made up of three units: the tractor production facility, which was evaluated at some EUR 43 million, VAT not included; another unit for the production of tractor parts, evaluated at some EUR 14 million, and other independent assets, worth some EUR 20 million.
Flavus Investitii is now in negotiations with the state. The contract should be signed within the next few weeks, and if all goes according to plan, the assets should be transferred in August.
Investment fund pops up from behind bid winner
The bid for the Brasov-based factory seemed to have a real estate stake, even though official papers stated the buyer needed to keep the same activity – tractor production – for at least five years. The common feature of most of the participants in the bid was their involvement, one way or another, in real estate.
MYO-O, a company controlled by businessman Ion Radulea, who is building Sema Parc real estate project through another company in the group, River Invest, took part in the bid.
Roses Rezidential Park, another bidder, is controlled by businessman and real estate investor Ion Tiriac. Iulius Group, the company controlled by Iasi-based businessman Iulian Dascalu, developer of Iulius Mall projects around the country, participated with a consortium of two companies. Of all the participants, only Ion Radulea had previously stated its clear intention to keep the tractor production activity at the Brasov factory.
But in the end the factory went to Flavus Investitii, a company set up in January 2007, and controlled by two shareholders in an investment fund. Victor Vadaneaux and Silviu Savin, the two local businessman controlling Flavus Investitii, are shareholders in Centerra Capital Partners. The fund owned by the two Romanians last year became the main partner of hedge fund Cheyne Capital. Cheyne is focused on private equity, infrastructure and real estate investments. By the time Business Review went to print, none of Cheyne Capital representatives could be contacted.
Vadaneaux and Savin plan to invest around EUR 100 million in the tractor production facility for which they will pay more than EUR 90 million. The planned investments will go on new equipment and real estate such as industrial buildings, said Savin, quoted by local media. The new owners haven't yet decided what they will do with the entire 124-hectare platform at Tractorul, but they will keep up tractor production activity for at least ten years, they have said.
Victor Vadaneaux, 43, has been living in UK for the last 27 years, where he has worked for various investment funds, Advent included. Thirty-six-year-old Silviu Savin left his hometown of Brasov 14 years ago and has lived since then in the UK. He has worked with, among others, investment fund Government of Singapore Investment Corporation.
Tractorul winners politically contested
Nicolae Vlad Popa, senator from the Liberal Democratic Party (PLD), who owns 41 percent of the shares in SIF Transilvania, shareholder at Tractorul, is suing the Authority for State Assets Recovery (AVAS) and Insolvency House Transilvania, for illegal property transfer and political involvement in the privatization.
“First of all, Flavus Investitii doesn't have tractor production as a domain of activity, but real estate projects. Second, there are no documents to prove where Flavus Investitii has the money from, neither the money deposited as a warrantee nor the remaining up to EUR 77 million without VAT – mainly because the company was founded in January 2007,” said Gheorghe Piperea, Popa's lawyer.
He also announced he would contest the emergency ordinance of the government on which the sale was based. “The emergency ordinance no 3/2007 is unconstitutional because it doesn't respect competition laws. This document allowed Flavus Investitii to buy the factory even thought it had no activity to do with industrial production,” said Popa.
Media discussions of the Tractorul privatization process prompted no reaction in the government, although Prime Minister Calin Popescu-Tariceanu said in 2005, immediately after the elections, that the government didn't want to privatize Tractorul just for sake of doing so and suggested that the future owners shouldn't use the factory just for real estate speculations.
AVAS has made previous unsuccessful attempts to privatize Tractorul Brasov since 2003. After long discussions with the Italian company Landini and Indian company Mahindra&Mahindra, the Romanian authorities and company representatives could not reach common ground.
Tractorul ceased activity three months ago when the shareholders decided to voluntarily liquidate the firm and to dismiss all 2,000 employees. AVAS owns 80.18 percent of Tractorul, SIF Transilvania 17.15 percent and the rest is controlled by other shareholders.
Corina Saceanu, Dana Ciuraru