COMMISSION DECISION (EU) 2019/1144

of 17 December 2018

on the State aid SA.36086 (2016/C) (ex 2016/NN) implemented by Romania for Oltchim SA

(notified under document C(2018) 8592)

(Only the Romanian version is authentic)

(Text with EEA relevance)

THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union, and in particular the first subparagraph of Article 108(2) thereof,

Having regard to the Agreement on the European Economic Area, and in particular Article 62(1)(a),

Having called on interested parties to submit their comments pursuant to the provision(s) cited above (1) and having regard to their comments,

Whereas:

1. PROCEDURE

(1) On 17 July 2009, the Romanian authorities notified to the Commission the planned conversion of a public debt of Oltchim S.A. (‘Oltchim’) into equity. On 7 March 2012, by Commission Decision 2013/246/EU (2) in case SA.29041 — Support measures in favour of Oltchim SA Râmnicu Vâlcea (‘the 2012 Commission decision’), the Commission concluded that the debt conversion of RON 1 049 million (EUR 231 million) did not entail State aid. That conclusion was based on the firm commitment of the Romanian Government to privatise Oltchim in full, including the whole stake resulting for the public authorities after the debt conversion.

(2) After the failed attempt to privatise Oltchim, the Romanian authorities initiated contacts with the Commission in October 2012 to prepare the formal notification of rescue aid to Oltchim (registered as SA.35558).

(3) In November 2012 the press reported that the Romanian authorities had concluded an agreement with the creditor banks of Oltchim for the financing of the resumption of Oltchim's production. Against this background, the Commission decided to open an ex officio case registered as SA.36086 and by letter of 18 January 2013 requested Romania to provide information. Romania replied to this request on 7 February 2013. The Commission requested additional information on 18 February 2013 to which Romania replied on 11 March 2013. Romania submitted additional information at a meeting in June 2013 and by letter of 25 September 2013.

(4) By letters of 5 August 2014, 16 October 2014 and 3 March 2015 the Commission requested additional information to which Romania replied respectively on 15 September 2014, 26 November 2014, 26 March 2015 and 16 April 2015. On 11 May 2015 the Commission requested additional information, which Romania provided at a meeting on 26 May 2015 and by letters of 10 June 2015 and 25 June 2015. On 3 September 2015 the Commission requested additional information which Romania supplied on 10 September 2015. Romania also submitted spontaneous information on 22 October 2015 and requested meetings, which took place on 23 October 2015 and 22 January 2016.

(5) By letter dated 8 April 2016, the Commission informed Romania that it had decided to initiate the procedure laid down in Article 108(2) TFEU in case SA.36086. The Commission decision to initiate the procedure was published in the Official Journal of the European Union (3). The Commission invited interested parties to submit their comments on the aid.

(6) The Commission received initial comments from Romania (15 June 2016) and from four interested parties. Third party comments were forwarded to Romania, which was given the opportunity to react; its comments were received by letter dated 28 November 2016.

(7) By letter of 29 July 2016, Romania proposed a modification to the sale process of Oltchim for the purpose of achieving economic discontinuity. The Romanian authorities supplied additional information (on 14 September 2016, 4 November 2016 and 5 December 2016), and modified the terms of the initial sale process.

(8) Following the above-mentioned exchanges, the consulting firm AT Kearney, in its quality of representative of Oltchim (‘the Seller’) provided successive reports on the progress of the asset sale of Oltchim on 27 January 2017, 4 April 2017, 25 July 2017, 15 September 2017, 21 November 2017, 18 January 2018, and 16 July 2018. (4)

(9) During the sale process, a number of third parties intervened and the Romanian authorities provided comments on each of these interventions.

(10) An additional request for information was sent to Romania on 26 January 2018 to which Romania replied on 16 May 2018.

2. BACKGROUND

2.1. Beneficiary

(11) Oltchim is one of the largest petrochemical companies in Romania and South-East Europe. The Romanian State (currently via the Ministry of Economy) maintains a controlling stake of 54,8 % in the company.

(12) Oltchim mainly produces liquid caustic soda, propylene oxide-polyols, plasticisers and oxo-alcohols. Oltchim is the biggest producer of liquid caustic soda on the European market (EU market share of 41 % in 2015), the only producer of caustic soda beads in Central Europe, as well as the only producer of polyvinyl chloride and polyethers in Romania and third in Europe. Oltchim exports over 74 % of its production inside and outside of Europe (5).

(13) Oltchim is the main industrial employer in Vâlcea (a Romanian region assisted under Article 107(3)(a) TFEU). In 2015 Oltchim employed 2 208 employees, of which, 1 982 employees at the Râmnicu Vâlcea site and 226 employees at the site of the Pitești — Petrochemical Division Bradu.

2.2. Facts

2.2.1. The public debt of Oltchim and failed privatisation attempts (1995-2011)

(14) Oltchim has a long history of economic difficulties. Over the period 1995-2000 it contracted a series of commercial loans, backed with State guarantees. Oltchim was not able to repay the loans and the banks called upon the State guarantees. In 2002 the Ministry of Finance transferred Oltchim's debt stemming from the State guarantees to the Romanian privatisation agency (‘AAAS’ (6)). The Ministry of Finance continued to make payments on account of the State guarantees until December 2006 and again transferred to AAAS all claims resulting from the subsequent payments made on the basis of the triggered guarantees.

(15) Over the years 2007-2012 Oltchim's financial situation deteriorated, its financial accounts systematically showed a growing operating loss, accumulated losses and negative own funds. On 31 December 2012 (before entering into insolvency) Oltchim's financial accounts showed an operating loss of EUR 62,9 million, a net loss of EUR 127,8 million and accumulated losses of EUR 383 million.

(16) Romania made several attempts to privatise Oltchim (in 2001, 2003, 2006, 2007 and 2008) but all failed.

(17) Specifically, in 2001, the State negotiated and signed with the Canadian mining company Exall Resources the sale of a 53,2 % stake. As the purchaser failed to pay the value of the shares (USD 10 million, that is approximately EUR 8,9 million (7)) and failed to guarantee the technological and environmental investments promised, the deal was no longer pursued (8). In 2002 the State decided to attempt a new call for privatisation, opting for the conversion of the AVAS (precursor of AAAS) debt into equity. However, the deadline for submitting bids was postponed twice and given the opposition of a potential investor and of minority shareholders including by action in Court, in 2003 the offer was revoked (9). Subsequently, after the revocation in 2006 of a conversion of the debt originally approved in 2003, the Romanian authorities again tried to privatise Oltchim together with the debt in 2006 and 2008. However, according to the Romanian authorities, no investor was interested in buying Oltchim under such conditions (10).

2.2.2. The 2012 Commission decision

(18) By the 2012 Commission decision, the Commission decided that the planned conversion into equity of debt towards AAAS of RON 1 049 million (11) (circa EUR 231 million) did not entail State aid. This decision was based on Romania's firm commitment to privatise the entire public share resulting from the debt conversion by the end of May 2012 at the latest, as expressed in two letters from the respective Prime Ministers at that time (12).

(19) The Commission took this view after having analysed critically the reports prepared by independent consultants (13) and submitted by the Romanian authorities in the course of proceedings. Those reports compared the proceeds from a liquidation of Oltchim with those of a privatisation. In the liquidation scenario, the value of Oltchim's assets was estimated as RON 692 055 000 (EUR 152,2 million), comprising RON 264 119 000 for pledged assets and RON 427 936 000 for unpledged assets (14).

(20) According to the 2011 Raiffeisen report, in the liquidation scenario AAAS would have collected around RON 105,4 million (around EUR 23 million), representing 12 % of its total claim.

(21) This amount was compared to the value of AAAS' claim in a debt conversion plus privatisation scenario. In this scenario, depending on the method used for the estimation of the enterprise value, the market value of Oltchim was estimated between EUR 28 million and EUR 97 million. Following the conversion of its debt into equity and the subsequent privatisation, AAAS would obtain between EUR 22,9 million and EUR 79,5 million (15).

(22) In view of this comparison, the Commission concluded that: ‘if the company is fully privatised in the short-term after the debt conversion, the notified Measure (conversion of the debt followed by full privatisation) does not involve an advantage to Oltchim as that measure allows the public creditor AVAS [AAAS] to recover more than if it decided to place the company in liquidation. In that respect, the Commission takes note of the firm commitment taken by the Romanian authorities at the time, to privatise the company in full by 31 May 2012’ (16).

(23) However, Oltchim did not implement the debt-to-equity conversion of AAAS debt as approved by the 2012 Commission decision. Production had just been suspended in August 2012 following a refusal of Oltchim's main electricity supplier Electrica S.A. (‘Electrica’) to provide services without being paid.

(24) Immediately after Oltchim ceased operation the Romanian authorities started to send clear signals to the public about their readiness to do all possible efforts to save Oltchim. Only a few days before the privatisation date, the Romanian Minister of Economy at the time indicated between 2 to 4 weeks as a timespan for the re-starting of Oltchim's production. He was quoted as saying that he had ‘discussed with the management of the complex who has a plan of re-launching of installations’ (17).

(25) On 22 September 2012 the privatisation process failed, with a few cases pending before the national courts in relation to the privatisation's process. (18)

2.2.3. Oltchim's situation after the failed privatisation of 22 September 2012

(26) After the failed privatisation, Oltchim's financial situation further deteriorated. During the immediate period following the failed privatisation, the Romanian authorities reiterated their readiness to do the necessary to save Oltchim (19).

(27) On 1 October 2012, a new strategy for the preparation of Oltchim's activity including financial support in the form of rescue aid was envisaged. In a contemporaneous press article, the Romanian Prime-minister at that time explained that the privatisation procedure has failed and added that, ‘[w]e have to explain today the reserve plan for resuming activities, saving jobs and preparing a new privatisation procedure, under very different, considerably improved conditions’ (20). In the same vein, the Prime-minister announced an upcoming agreement with various creditors for rescuing the company: ‘Oltchim's restarting plan will be presented on Thursday and will provide for the next steps on the Vâlcea plant […] Minister of Economy, Commerce and Business Environment […] and the Finance Minister will start to officially discuss with all the main creditors, AVAS, Electrica and the three banks that are the main creditors of Oltchim: BCR, Banca Transilvania and CEC. Together with them, we will present on Thursday the plan to relaunch Oltchim, which clearly sets out the necessary steps for a new management at Oltchim, to finance the restarting of the production, the period of the activity, the payment of outstanding salaries and the preparation for the privatisation that will most likely occur during 2013, under conditions other than those in which it is currently taking place’. (21)

(28) On 17 October 2012, the State Secretary of the Ministry of Economy declared to the press that parts of Oltchim were to be re-opened in a matter of days and that the Government intended to grant a EUR 20 million rescue aid to Oltchim (22).

(29) On 24 October 2012 Oltchim managed to restart its production thanks to a change in trading conditions granted to Oltchim by two public suppliers (CET Govora and National Salt Company Salrom) (23): — CET Govora signed a new electricity contract with Oltchim on 15 September 2012 and then agreed to increase electricity supply (initially from 25 October 2012, then from 12 November 2012) and then to further continue supplies from 1 January 2013. These changes in the contractual relationship with Oltchim seem to have been taken in the implementation of several decisions (24) issued by the Vâlcea County Council to ensure electricity supply to Oltchim. — National Salt Company Salrom (‘Salrom’) accepted postponement of payments for its supplies.

(30) On 15 November 2012, the Minister of Economy made declarations to the press about the Government's commitment to keep Oltchim alive: ‘The idea of insolvency goes out of hand as long as we would have concluded the deal with the main creditors. This is the reason why we have concluded a reorganisation agreement, a controlled restructuring, together with Oltchim's big creditors. That is, not to wake up tomorrow with the big creditors — banks, private creditors, traders, suppliers of raw materials — asking for Oltchim's insolvency. We are aiming with this agreement is to be able to restart, rescue, restructure Oltchim in a controlled manner, with the creditors' agreement’ (25).

(31) On 23 November 2012, the Ministry of Finance, the Ministry of Economic Affairs, the Ministry of Transport and Infrastructure, AAAS and OPSPI (26) signed a Memorandum of Understanding (‘the Memorandum’) with Oltchim's creditors, i.e. various private and State-owned banks, as well as State owned undertakings such as Electrica, Salrom, CFR Marfă SA. The parties to the Memorandum agreed that the Ministry of Economy and OPSPI would register a special purpose vehicle (SPV) company free of debts with full state capital (Oltchim SPV), no later than 1 January 2013, so that the banks could securely provide the necessary financing support for the resumption of the production at Oltchim. In this regard, by Government Emergency Order No 59/2012 the Government instructed the Ministry of Economic Affairs to initiate legal procedures for setting up a SPV company.

(32) However, while the Memorandum and its objectives were maintained, the Ministry of Economic Affairs temporarily abandoned the plans of setting up on a short-term basis the Oltchim SPV vehicle. Instead, Oltchim, at its own request, entered the insolvency proceedings governed by Law No 85/2006 (‘the insolvency law’) on 30 January 2013.

2.2.4. Oltchim's insolvency proceedings as from 30 January 2013

2.2.4.1. The legal framework: the Romanian insolvency law

(33) The insolvency law sets out a collective procedure for covering liabilities of a debtor in insolvency condition.

(34) Once a company enters a collective insolvency procedure the decisional power over administration activities of that company moves from the shareholders to a special administrator who should act in the best interest of the company (27). After withdrawal of the right to administrate, the company is then represented and run by a Court-appointed receiver/liquidator, depending on the option chosen. The mandate of the special administrator is then reduced to representing the best interests of the shareholders.

(35) The company's general shareholders' meeting appoints the special receiver who must be approved by the Court (a so called Court-appointed receiver). Within the deadline established by the syndic-judge (a judge with special powers in bankruptcy and insolvency proceedings), the Court-appointed receiver or the liquidator, shall prepare and submit to the syndic-judge a report on the reasons and circumstances that led to the debtor's insolvency (28). The report shall specify whether there is any possibility for reorganisation of the debtor's activity or any reasons that do not allow for his reorganisation. In the latter case, the Court-appointed receiver should propose the bankruptcy proceedings. If the Court-appointed receiver indicates the possible recovery of the debtor's activity based on a judicial reorganisation plan (‘the Reorganisation Plan’ or ‘the Plan’), it will specify who prepares the reorganisation plan (the debtor, or the Court-appointed receiver alone or together with one or several creditors).

(36) Following the opening proceedings, all claims of creditors are suspended and new ones cannot be initiated (29). All service providers (electricity, gas, water, telephony) shall not be entitled to change, refuse or temporarily interrupt such a service to the debtor in case the latter has the capacity of captive consumer (30).

(37) The Court-appointed receiver shall notify the creditors to file a statement of claims against debtor within a legal time limit established by the decision of the syndic-judge on the start of insolvency proceedings. On this basis, the Court-appointed receiver prepares a so-called preliminary list of creditors. Such a list shall include creditors in two main categories: secured creditors (creditors with claims held by entities that benefit from collaterals over the goods from the debtor's estate, regardless whether this is the main debtor or a third party guarantor for the persons benefiting from the collaterals) and unsecured creditors (creditors with claims that do not benefit from any guarantees against the debtor's estate). Other categories of claims to be included in the list are: salaries and budgetary creditors.

(38) The debtor, the creditors and any other interested party have a right to appeal to the syndic-judge the preliminary list of creditors (31). After all appeals are settled, the Court-appointed receiver prepares a final list of creditors, showing the amount, the priority and condition (secured or unsecured) of each claim and sends it to the Court for approval. Once all appeals are settled, the list becomes final.

(39) The insolvency law foresees two alternative procedures: (a) judicial reorganisation (Articles 94-105 of the insolvency law governed by the rules on the general procedure) which aims at reorganising the debtor's activity in order to pay the claims according to the payment plan of claims, or (b) bankruptcy procedure (Articles 107-129 of the insolvency law governed by the rules on the simplified procedure) in which the debtor's activity is reduced only to the necessary steps for liquidation in order to pay the debts by selling the assets and by recovering the receivables.

(40) Judicial reorganisation is the procedure applied to the debtor to pay his debts following a reorganisation of its activities and according to a payment plan. This procedure implies the preparation, approval, implementation and observance of a reorganisation plan, which may provide, as a whole or separately, for: (a) operational and/or financial restructuring of the debtor; (b) corporate restructuring by amendment of the share capital structure; or (c) limitation of activity by liquidation of certain assets.

(41) The Court-appointed receiver prepares the reorganisation plan together with the List of Creditors and sends it to the Court for approval. The plan must be also discussed and approved by the creditors. The insolvency law provides for the following distinct categories of claims, which vote separately: (a) secured claims, (b) salary claims, (c) budgetary claims, (d) unsecured claims established as per Article 96(1), i.e. the so-called essential suppliers, (e) other unsecured claims (32).

(42) Pursuant to Articles 100 and 101 of the insolvency law: (a) The plan is deemed to be accepted if an absolute majority of the categories of creditors votes in favour of the plan, provided that at least one of the disadvantaged categories (33) accepts the plan. (b) The plan is deemed to be accepted by a category of creditors if in that category the plan is accepted by an absolute majority of the value of the claims belonging to that category. (c) Each claim benefits from a voting right that the holder exerts for the category of claims that includes the respective claim (d) Each disadvantaged category of creditors that rejects the plan will be treated fairly and equitably under the plan.

(43) Pursuant to the definition in Article 3(21) of the insolvency law the term ‘disadvantaged category’ means a claim category for which the reorganisation plan stipulates at least one of the following modifications for that category: (a) decrease in the amount of the claim; (b) decrease in the securities or other accessories, such as rescheduling the payments to the disadvantage of the creditor; (c) the value updated with the reference interest of the National Bank of Romania, unless established otherwise in the contract concerning that claim, or in special laws, is lower than the value recorded in the consolidated list of claims.

(44) When the decision confirming a plan becomes effective, the debtor's activity shall be reorganised accordingly, the claims and rights of the creditors and of the other parties concerned being amended as provided by the plan. If no plan is confirmed, the syndic-judge shall order the immediate initiation of the bankruptcy procedure.

(45) Bankruptcy procedure means a liquidation of the debtor's assets to cover liabilities, followed by the debtor's write-off from the registry.

(46) Pursuant to Article 107 of the insolvency law a debtor enters the bankruptcy procedure in the following cases: (a) on its own request, by presenting to the syndic-judge a declaration to enter directly into bankruptcy, or (b) if it initially declared the intention to enter reorganisation but did not propose a reorganisation plan or the proposed plan has not been accepted and confirmed.

(47) During the bankruptcy procedure, there are two categories of assets subject to sale (pledged/secured assets and unpledged/unsecured assets) and therefore two ways of distribution of amounts received from a sale amongst the creditors (Article 121 for pledged assets and Article 123 for unpledged assets and for any surplus left from the sale of pledged assets). Liquidation shall begin immediately after the completion of the inventory of assets from the debtor's estate by the liquidator. The assets may be sold together — as an operational group — or individually. Depending on the circumstances of the case and if possible, the assets of debtor shall be valued individually and in bulk, as a functional group.

(48) According to Article 121 of the insolvency law, the following order of distribution of funds obtained from selling the debtor's pledged assets applies: (1) taxes, stamps and other expenses relating to the sale of such assets, including the expenses incurred for the preservation and administration of such assets, as well as remuneration of liquidators; and (2) claims of the secured creditors.

(49) In the event the amounts obtained from the sale of pledged assets are insufficient for the full payment of secured creditors, the secured creditors shall have unsecured claims for the difference. If after the payment of the amounts to the secured creditors, there is a surplus, it will be distributed amongst unsecured creditors.

(50) According to Article 123 of the insolvency law, the claims shall be paid as follows: (1) taxes, stamps and other expenses relating to the procedure, (2) salary claims, (3) credits granted by credit institutions after the opening of proceedings, as well as the claims resulted from the preservation of the debtor's activity after the opening proceedings (current debts), (4) budgetary claims, (5-7) other claims (such as allowances for children, family allowances, bank loans), (8) other unsecured claims.

2.2.4.2. Preparation and approval of Oltchim's Reorganisation Plan

(51) By the decision of Creditors at the meeting of 15 April 2013, Rominsolv S.p.r.l and B.D.O. — Business Restructuring S.p.r.l. (‘R/BDO’) were appointed as official receivers of Oltchim (‘the Consortium’). This appointment was confirmed by the Court on 13 May 2013.

(52) At the Court hearing of 19 June 2013, Oltchim expressed its intention to enter a judicial reorganisation and to pay the claims by way of a reorganisation plan. This request was based on a ‘Report on the causes of insolvency’ prepared by the Consortium) pursuant to Article 59(1) to (3) of the insolvency law. The Report on the causes of insolvency mentioned that there was a real possibility of effective reorganisation of activity of the debtor, under a court-supervised reorganisation plan, which it intended to prepare and submit to the Court.

(53) On 3 June 2013 the Court-appointed receivers appointed Winterhill S.r.l for the evaluation of the market value and the liquidation value of Oltchim's assets (‘the Winterhill Report’), a necessary step for the preparation of the payment plan.

(54) Winterhill S.r.l. determined the market value of Oltchim's assets and their liquidation value in accordance with the International Valuation Standards as follows: (a) the market value: ‘The amount for which a property could be exchanged on assessment date between a willing buyer and a willing seller in the framework of a transaction with an objectively determined price, after a corresponding marketing period, in which both the seller and the buyer acted knowledgeably, prudently and without coercion’; (b) the liquidation value (or forced sale value): ‘The amount that could be received reasonably by selling a property in a shorter period of time than the marketing period required to be consistent with the defined market value’.

(55) The Winterhill Report evaluated the different Oltchim assets classes (34) using different valuation methods depending on the type of asset evaluated (market comparison method or net replacement cost method).

(56) As regards the valuation of fixed assets (plants, equipment and machinery), the Winterhill Report estimated a so called in situ market value and ex situ market value. According to the Winterhill Report, the in situ market value implies that the plant is fully operational for further use at its operation site. This value takes into account installation costs, i.e. electrical and mechanical, that are significant in the case of such plants. The ex situ market value implies that the plant is not operational and individual assets are evaluated in relation with their removal at the expense of the buyer. In Oltchim's case, the electrical and mechanical equipment were considered to have no significant value and, depending on their complexity, even to have a negative impact on the value of an asset. The liquidation value of fixed assets was defined in the Winterhill Report as the ex situ market value less the costs estimated for dismantling and removal from the industrial premises. This value included an estimation of the costs for clearing and preparation of the assets for sale, which was expected to be significant in the case of Oltchim, because of the polluting and hazardous nature of many materials used within the plants. It also included allocations for marketing expenses, sale expenses, sellers' fees and costs of staff involved.

(57) On 20 July 2013 Winterhill S.r.l. completed its valuation. The Winterhill Report estimated the market of Oltchim at EUR 293,7 million (approx. RON 1 270 million) and the liquidation value as EUR 141 million (RON 636 million), out of which EUR 108 million (RON 491 million) for secured assets and around EUR 32 million (RON 145 million) for unsecured assets (35).

(58) The Winterhill Report was presented to the Meeting of Creditors on 2 December 2013 and approved on 4 December 2013. Initially AAAS questioned the evaluation contained in the Winterhill Report and filed a complaint against the Creditors' Meeting decision approving it. Consequently, the Court approved a double check of the valuation report and finally dismissed AAAS' challenge, further noting that AAAS did not condition its vote on the Plan on the result of a re-examination of that report (36).

(59) Based on the Winterhill Report, in July 2013, the Court-appointed receivers prepared the Reorganisation Plan of Oltchim. The main purpose of the Plan was to find a new investor that will take over the assets/business of Oltchim. The sale may take place in any of the three options proposed:

1st option — Creation of a new entity (Oltchim SPV) and the transfer of all viable assets from Oltchim SA to the latter; sale of Oltchim SPV shares:

(60) Oltchim SPV was to be a company free of debts. Oltchim SPV would take over the functional part of Oltchim SA as a going concern. (37) Oltchim SPV shall be 100 % held by Oltchim SA and aimed to be sold in 1-3 years to an investor. The price for the sale of Oltchim SPV shares was estimated at EUR 306 million and the minimum starting price to be set at a level above that particular amount. This price was estimated with a reference to the MV of EUR 293,7 million established in the Winterhill Report (38).

(61) Given that some assets transferred to Oltchim SPV were mortgaged to some Oltchim SA's creditors, the object of their security would be replaced with shares issued by Oltchim SPV in proportion to the amounts of their security. The secured creditors would thus be entitled (within 10 days after confirmation of the reorganisation plan by the syndic judge) to opt for the removal of the existing securities on the assets upon the full payment of the price of Oltchim SPV shares.

(62) Oltchim's creditors were to be paid in accordance to the amounts provided in the Payment Plan (see Table 3 below).

2nd option — Debt-to-equity swap:

(63) Oltchim's creditors could convert their debts to equity (Oltchim SA's shares) in proportion and in accordance to the amounts provided in the Payment Plan (see Table 3 below); or

3rd option — Debt- to-assets swap:

(64) Some of the debts towards the State would be paid by transfer of Oltchim SA's assets, i.e. land, buildings, free of charge.

(65) The Plan provided for two scenarios for the continuation of Oltchim's activity, namely: (a) Scenario A: Oltchim's business will continue with the oxo-alcohols plant restarted, for which no external funding sources are needed; (b) Scenario B: Oltchim's business will be enhanced by restarting the phthalic Anhydride-DOF plant with the use of external financing sources.

(66) The Plan specified the implementation period, i.e. three years after the confirmation of the Plan by the judge. During that period, the special administrator shall ensure Oltchim's administration, under the supervision of the Court-appointed receiver.

(67) After all appeals were settled, on 9 January 2015 the Court-appointed receiver completed and sent to the Court the final List of creditors of Oltchim, showing the amount, priority and the status — secured or unsecured — of each claim. The List included five categories of creditors: (1) secured creditors, (2) salary claims, (3) budgetary creditors, (4) unsecured creditors under Article 96 of the insolvency law (so-called ‘essential suppliers’) and (5) other unsecured creditors, as presented in the Table 1 below: Table 1 List of creditors as presented in the table of claims Categories of creditors Total debt (RON) Total debt (EUR) (*1) % within debt category (%) (1) Secured creditors of which 890 222 871 195 849 032 ALPHA Bank Romania 3 066 386 674 605 0,34 Areleco Power SRL 15 000 000 3 300 000 1,68 AAAS (*2) 9 445 548 2 078 021 1,06 Erste Group Bank AG 229 058 167 50 392 797 25,73 Banca Transilvania SA 159 957 116 35 190 566 17,97 Bancpost SA 2 494 327 548 752 0,28 Bulrom Gas Impex SRL 23 776 278 5 230 781 2,67 Calvi Trade Limited 23 724 237 5 219 332 2,66 CEC Bank 56 321 014 12 390 623 6,33 Chemimpex Ltd 26 012 5 723 0,003 DGFP Craiova 5 709 799 1 256 156 0,64 Electrica Furnizare SA 26 832 832 5 903 223 3,01 Electrica S.A. 200 951 974 44 209 434 22,57 Garanti Bank SA 1 382 676 304 189 0,16 Honeywell Romania Srl 7 056 360 1 552 399 0,79 ING bank N.V. 183 157 40 295 0,02 MFC Commodities GmbH 13 155 900 2 894 298 1,48 OMV Petrom S.A. 55 519 911 12 214 380 6,24 Polchem Societe Anonyme 23 714 748 5 217 245 2,66 National Salt Company and Rm Vâlcea Mining Company 15 750 820 3 465 180 1,77 Unicredit Tiriac Bank SA 17 095 609 3 761 034 1,92 (2) Salaries 9 704 264 2 134 938 (3) Budgetary creditors of which 1 274 807 584 280 457 668 AAAS 1 191 856 674 262 208 468 93,49 Environmental Fund Administration 59 205 056 13 025 112 4,64 Romanian National Water Administration 872 967 192 053 0,07 DGFP Craiova 19 732 303 4 341 107 1,55 Romanian Energy Regulatory Authority 18 484 4 066 0,001 Bradu Town Hall 1 000 653 220 144 0,08 Rm. Vâlcea City Hall 2 118 976 466 175 0,17 Băbeni Town Hall 2 471 544 0,0002 (4) Unsecured creditors under Article 96 of the insolvency law 150 384 370 33 084 561 CET Govora 136 899 919 30 117 982 91,03 Romanian National Water Administration 13 484 451 2 966 579 8,97 (5) Other unsecured creditors of which (examples) 1 129 340 017 248 454 804 Electrica S.A. 457 583 381 100 668 344 40,52 Electrica Furnizare S.A. 29 700 994 6 534 219 2,63 Erste Group Bank 116 868 626 25 711 098 10,35 ING bank N.V. 13 431 574 2 954 946 1,19 CFR Marfă 115 293 055 25 364 472 10,21 National Salt Company and Rm Vâlcea Mining Company 15 076 968 3 316 933 1,34 MFC Commodities GmbH 149 703 788 32 934 833 13,26 Kronos Worldwide Limited 51 660 368 11 365 281 4,57 Total 3 454 458 105 759 980 783

(68) Oltchim's outstanding debts towards the State and State owned enterprises (‘SoEs’) were around EUR 519 million, out of which around EUR 264 million to AAAS, around EUR 232 million to various SoEs (out of which around EUR 145 million to Electrica), around EUR 19 million to national and regional bodies (for example around EUR 13 million to the Environmental Fund Administration) and around EUR 12 million to the State owned CEC Bank. Table 2 Public creditors of Oltchim Creditor Total debt (RON) Total debt (EUR) % within the total debt (%) Budgetary creditors AAAS 1 201 301 222 264 286 269 34,77 DGFP Craiova 25 442 102 5 597 262 0,73 Environment Fund Administration 59 205 056 13 025 112 1,71 Romanian National Water Administration 14 357 418 3 158 632 0,41 Romanian Energy Regulatory Authority 18 484 4 066 0,00054 Bradu Town Hall 1 000 653 220 144 0,028 Rm.Vâlcea City Hall 2 118 976 466 175 0,06 Băbeni Town Hall 2 471 544 0,00007 State owned enterprises (examples) CEC Bank 56 321 014 12 390 623 1,63 National Salt Company 30 827 788 6 782 113 0,89 CET Govora 136 899 919 30 117 982 3,96 Electrica SA 658 535 355 144 877 778 19,06 Electrica Furnizare 56 533 826 12 437 442 1,63 CFR Marfă 115 293 055 25 364 472 3,33 Total 2 357 857 339 518 728 615 68,25

(69) The following creditors had the biggest claims towards Oltchim: AAAS (around 35 % of the total debt), Electrica (19 % of the total debt), Erste Group Bank AG (10 % of the total debt), MFC Commodities Gmbh (4,71 % of the total debt), Banca Transilvania S.A. (4,63 % of the total debt), CET Govora (3,96 % of the total debt), CFR Marfă (3,34 % of the total debt) and CEC Bank (1,63 % of the total debt).

(70) The Court-appointed receiver sent the Reorganisation Plan together with the List of Creditors to the Court on 4 February 2015. At the meeting on 9 March 2015 the Creditors discussed and then approved the Plan pursuant to Article 101 of the insolvency law.

(71) More concretely, under the approved Plan: (a) The price obtained from selling Oltchim SPV (estimated in the Plan as EUR 306 million) will be used with priority for paying various administrative expenditures related to the transfer of Oltchim SA's assets to Oltchim SPV, Court-appointed receivers' fees and tax on income obtained, as well as the current debts of Oltchim SA, incurred after the start of the insolvency procedure (39). (b) After the payments under point (a) are made, the remainder (the net amount) of around EUR 212 million to EUR 231 million will be used to partially pay the past debts of Oltchim SA, according to the approved Payment Plan (see Table 3 below): Table 3 Payment Plan Categories of creditors Total debt (EUR) Distributed amounts (EUR) % coverage min max min max (1) Secured creditors 195 849 032 143 509 496 156 394 852 73 80 ALPHA Bank Romania SA 674 605 494 321 538 705 Arelco Power SRL 3 300 000 2 418 097 2 635 211 AAAS 2 078 021 1 522 522 1 659 225 Erste Group Bank AG 50 392 797 36 925 654 40 241 112 Banca Transilvania SA 35 190 566 25 786 119 28 101 387 Bancpost SA 548 752 402 102 438 205 Bulrom Gas Impex SRL 5 230 781 3 832 889 4 177 035 Calvi Trade Limited 5 219 332 3 824 500 4 167 892 CEC Bank 12 390 623 9 079 311 9 894 518 Chemimpex Ltd 5 723 4 193 4 570 DGFP Craiova 1 256 156 920 456 1 003 102 Electrica Furnizare SA 5 903 223 4 325 625 4 714 012 Electrica SA 44 209 434 32 394 743 35 303 395 Garanti Bank SA 304 189 222 896 242 909 Honeywell Romania Srl 1 552 399 1 137 531 1 239 667 ING Bank NV 40 295 29 526 32 177 MFC Commodities GmbH 2 894 298 2 120 816 2 311 238 OMV PETROM SA 12 214 380 8 950 168 9 753 780 Polchem SA 5 217 245 3 822 970 4 166 225 National Salt Company and Rm Vâlcea Mining Company 3 465 180 2 539 134 2 767 116 Unicredit Tiriac Bank SA 3 761 034 2 755 922 3 003 370 (2) Salaries 2 134 938 2 134 938 2 134 938 100 100 (3) Budgetary creditors 280 457 668 49 485 271 55 007 562 18 20 AAAS 262 208 468 46 265 297 51 428 256 Environment Fund Administration 13 025 112 2 298 212 2 554 680 Romanian National Water Administration 192 053 33 887 37 668 DGFP Craiova 4 341 107 765 965 851 443 Romanian Energy Regulatory Authority 4 066 717 798 Bradu Town Hall 220 144 38 843 43 178 Rm. Vâlcea City Hall 466 175 82 254 91 433 Băbeni Town Hall 544 96 107 (4) Unsecured creditors under Article 96 of the insolvency law 33 084 561 9 883 865 9 883 865 30 30 CET Govora 30 117 982 8 997 613 8 997 613 Romanian National Water Administration 2 966 579 886 252 886 252 (5) Other unsecured creditors, of which (examples) 248 454 804 0 0 0 0 Electrica S.A. 100 668 344 0 0 Electrica Furnizare S.A. 6 534 219 0 0 Erste Group Bank 25 711 098 0 0 ING bank N.V. 2 954 946 0 0 CFR Marfă 25 364 472 0 0 National Salt Company and Rm Vâlcea Mining Company 3 316 933 0 0 MFC Commodities GmbH 32 934 833 0 0 Kronos Worldwide Limited 11 365 281 0 0 Total 759 980 783 205 013 570 223 421 217

(72) According to the above Payment Plan, the following debt coverage will apply: (a) salaries — 100 % debt coverage; (b) secured creditors — 73-80 % debt coverage; (c) essential suppliers (SoEs: CET Govora and Romanian National Water Administration) — 30 % debt coverage; (d) budgetary creditors (for example AAAS, Environmental Fund Organisation) — 18-20 % debt coverage; (e) other unsecured creditors (for instance Electrica and Electrica Furnizare) — 0 % debt coverage.

(73) This plan therefore leads to a substantial debt cancellation, notably on the part of the budgetary creditors as set out below in Tables 4 and 5. Table 4 Debts to be cancelled Category of creditors Total debt (RON) Total debt (EUR) Debt to be cancelled under the Plan (EUR) Min Max (1) Secured creditors of which 890 222 871 195 849 032 39 453 960 52 339 316 ALPHA Bank Romania SA 3 066 386 674 605 135 900 180 284 Arelco Power SRL 15 000 000 3 300 000 664 789 881 903 AAAS 9 445 548 2 078 021 418 575 555 278 Erste Group Bank AG 229 058 167 50 392 797 10 151 685 13 467 143 Banca Transilvania SA 159 957 116 35 190 566 7 089 178 9 404 447 Bancpost SA 2 494 327 548 752 110 547 146 650 Bulrom Gas Impex SRL 23 776 278 5 230 781 1 053 747 1 397 892 Calvi Trade Limited 23 724 237 5 219 332 1 051 440 1 394 832 CEC Bank 56 321 014 12 390 623 2 496 105 3 311 312 Chemimpex Ltd 26 012 5 723 1 153 1 529 DGFP Craiova 5 709 799 1 256 156 253 054 335 699 Electrica Furnizare SA 26 832 832 5 903 223 1 189 211 1 577 598 Electrica SA 200 951 974 44 209 434 8 906 039 11 814 691 Garanti Bank SA 1 382 676 304 189 61 279 81 292 Honeywell Romania Srl 7 056 360 1 552 399 312 733 414 869 ING Bank NV 183 157 40 295 8 117 10 769 MFC Commodities GmbH 13 155 900 2 894 298 583 060 773 482 OMV PETROM SA 55 519 911 12 214 380 2 460 600 3 264 213 Polchem SA 23 714 748 5 217 245 1 051 020 1 394 274 National Salt Company 15 750 820 3 465 180 698 064 926 047 Unicredit Tiriac Bank SA 17 095 609 3 761 034 757 664 1 005 112 (2) Salaries 9 704 264 2 134 938 0 0 (3) Budgetary creditors of which 1 274 807 584 280 457 668 225 450 106 230 972 397 AAAS 1 191 856 674 262 208 468 210 780 213 215 943 171 Environment Fund Administration 59 205 056 13 025 112 10 470 432 10 726 900 Romanian National Water Administration 872 967 192 053 154 385 158 166 DGFP Craiova 19 732 303 4 341 107 3 489 664 3 575 141 Romanian Energy Regulatory Authority 18 484 4 066 3 269 3 349 Bradu Town Hall 1 000 653 220 144 176 966 181 300 Rm. Vâlcea City Hall 2 118 976 466 175 374 742 383 921 Băbeni Town Hall 2 471 544 437 448 (4) Unsecured creditors under Article 96 of the insolvency law 150 384 370 33 084 561 23 200 696 23 200 696 CET Govora 136 899 919 30 117 982 21 120 370 21 120 370 Romanian National Water Administration 13 484 451 2 966 579 2 080 327 2 080 327 (5) Other unsecured creditors of which (examples) 1 129 340 017 248 454 804 248 454 804 248 454 804 Electrica S.A. 457 583 381 100 668 344 100 668 344 100 668 344 Electrica Furnizare S.A. 29 700 994 6 534 219 6 534 219 6 534 219 Erste Group Bank 116 868 626 25 711 098 25 711 098 25 711 098 ING bank N.V. 13 431 574 2 954 946 2 954 946 2 954 946 CFR Marfă 115 293 055 25 364 472 25 364 472 25 364 472 National Salt Company and Rm Vâlcea Mining Company 15 076 968 3 316 933 3 316 933 3 316 933 MFC Commodities GmbH 149 703 788 32 934 833 32 934 833 32 934 833 Kronos Worldwide Limited 51 660 368 11 365 281 11 365 281 11 365 281 Total 3 454 458 105 759 980 783 536 559 566 554 967 213 Table 5 Public debts to be cancelled Creditor Total debt (EUR) Debts to be cancelled (EUR) % of debt to be cancelled (%) min max min max Budgetary creditors AAAS 264 286 269 211 198 788 216 498 450 79,91 81,9 DGFP Craiova 5 597 262 3 742 718 3 910 841 66,87 69,8 Environment Fund Administration 13 025 112 10 470 432 10 726 900 80,39 82,3 Romanian National Water Administration 3 158 632 2 234 711 2 238 493 70,75 70,8 Romanian Energy Regulatory Authority 4 066 3 269 3 349 80,39 82,3 Bradu Town Hall 220 144 176 966 181 300 80,39 82,3 Rm.Vâlcea City Hall 466 175 374 742 383 921 80,39 82,3 Băbeni Town Hall 544 437 448 80,37 82,3 State owned enterprises (examples) CEC Bank 12 390 623 2 496 105 3 311 312 20,15 26,7 National Salt Company 6 782 113 4 014 997 4 242 980 59,20 62,5 CET Govora 30 117 982 21 120 370 21 120 370 70,13 70,1 Electrica SA 144 877 778 109 574 383 112 483 035 75,63 77,6 Electrica Furnizare 12 437 442 7 723 430 8 111 816 62,10 65,2 CFR Marfă 25 364 472 25 364 472 25 364 472 100 100 Total 518 728 615 398 495 819 408 577 686 77 78,7

(74) The creditors voted on this Plan. According to the Minutes from the Creditors Assembly meeting of 9 March 2015 (note that only the main public and private creditors and the employees are presented below): (a) AAAS voted in favour of the Plan, both in the secured debts category (where its claim amounted to 1,061 % of that category) and in the budgetary debts category (where its claim amounted to 98,04 % of that category). As a result, AAAS agreed to write off between 80 % and 82 % of its entire claim towards Oltchim. (b) DGFP Craiova (‘DGFP’) (40) voted against the Plan both in the secured debts category (where its claim amounted to 0,64 % of that category) and in the budgetary debts category (where its claim amounted to 1,55 % of that category). DGFP voted against a 67 % to 70 % write off of its claims towards Oltchim. (c) CEC Bank voted in favour of the Plan in the secured debts category (where its claim amounted to 6,33 % of that category). CEC Bank had no claims under other categories. As a result, CEC Bank agreed to write off 20 % to 27 % of its entire claim towards Oltchim. (d) Salrom voted in favour of the Plan, both in the secured debts category and in the unsecured debts category (where its claim amounted respectively to 1,77 % and 1,34 %). As a result, Salrom agreed to write off between 59 % and 62 % of its entire claim towards Oltchim. (e) CET Govora and Romanian National Water Administration voted in favour of the Plan in the unsecured debts under Article 96 of the insolvency law category. As a result, CET Govora and Romanian National Water Administration agreed to write off respectively 70 % to 71 % of their claims towards Oltchim. (f) Electrica voted in favour of the Plan, both in the secured debts category and in the unsecured debt category (where its claims amounted respectively to 22,5 % and 40,5 %). As a result, Electrica agreed to write off 76 % to 77 % of its entire claim towards Oltchim. (g) Electrica Furnizare (41) voted against the Plan in the secured debts category and in the unsecured debt category (where its claims amounted respectively to 3,01 % and 2,63 %). Electrica Furnizare voted against a 62 % to 65 % write off of its claims towards Oltchim. (h) Employees voted in favour of the Plan. Employees were sure to receive 100 % debt coverage.

(75) The Plan was approved because it complied with the insolvency law conditions, namely: (a) an absolute majority of the categories of creditors voted in favour of the Plan (out of the 5 debt categories, all 5 voted in favour); (b) within each category the Plan was accepted by an absolute majority of the value of the claims belonging to that category; (c) at least one disadvantaged category accepted the Plan (in fact all disadvantaged categories (42) voted in favour of the Plan).

(76) At the Court hearing of 25 March 2015, the syndic judge asked to provide more clarifications on the Plan and postponed the hearing until 22 April 2015. At the hearing of 22 April 2015 the Court endorsed the Plan by approving only the first option, i.e. partial debt cancellations as agreed by creditors and the creation of a new entity (Oltchim SPV) and the transfer of all viable assets from Oltchim SA to the latter. On 24 September 2015 the Court of Appeal Pitești dismissed the appeals brought by ANAF (Agenția Națională de Administrare Fiscală) and Electrica Furnizare against the judgment approving the Reorganisation Plan. By this judgement the Plan became final.

2.2.4.3. Implementation of the Reorganisation Plan

(77) During the insolvency proceedings, prior to the approval of the Reorganisation Plan, Oltchim implemented a series of measures to reduce its costs, such as dismissing 918 employees in June 2013 (a further 225 employees were supposed to be dismissed by November 2015). In June 2014, Oltchim changed an electrolyser in the main production facilities (for a total value of EUR 800 000). To further improve its EBITDA, Oltchim restarted the oxo-alcohols plant on 9 September 2014.

(78) The Romanian authorities informed (43) that Oltchim improved its economic and financial performance. Its turnover increased in 2015 by 31 % compared to 2014, and by 59 % compared to 2013, as a result of a growth in sales of main products manufactured (33 % increase for polyether polyols, 7 % increase for chlor-alkali products). EBITDA improved by RON 109 million compared to 2013.

(79) New attempts to privatise company took place starting with June 2013 however failed again later that year.

(80) According to the Plan as agreed by the creditors and endorsed by the Court (see Table 5 above), budgetary creditors and SoEs have to cancel up to a total EUR 408,5 million of debt (for AAAS around EUR 216 million, representing 81,9 % of its total claim and EUR 174,3 million for SoEs).

(81) The so-called essential suppliers (i.e. CET Govora SA and the National Water Administration) had to cancel EUR 21,2 million and EUR 2,2 million respectively, representing 70 % to 71 % of their total claims. Electrica had to cancel EUR 112 million, representing 77,6 % of its total claim.

(82) Further to the amounts corresponding to the debt cancellation for various public creditors contained in Table 5, Table 6 below reflects the corresponding amounts of debts to be recovered in the scenario of a one-block sale of Oltchim SPV foreseen in the Reorganisation plan as resulting from the approved maximum write-off. Table 6 Public creditors (debt cancellation and debt recovery under the Plan) (EUR) Creditor Total debt Debts to be cancelled (approved maximum write-off) Minimum debts foreseen to be recovered following the future sale of Oltchim SPV Budgetary creditors AAAS 264 286 269 216 498 450 47 787 819 DGFP Craiova 5 597 262 3 910 841 1 686 422 Environment Fund Administration 13 025 112 10 726 900 2 298 212 Romanian National Water Administration 3 158 632 2 238 493 920 139 Romanian Energy Regulatory Authority 4 066 3 349 717 Bradu Town Hall 220 144 181 300 38 843 Rm.Vâlcea City Hall 466 175 383 921 82 254 Băbeni Town Hall 544 448 96 State owned enterprises (examples) CEC Bank 12 390 623 3 311 312 9 079 311 National Salt Company 6 782 113 4 242 980 2 539 134 CET Govora 30 117 982 21 120 370 8 997 613 Electrica SA 144 877 778 112 483 035 32 394 743 Electrica Furnizare 12 437 442 8 111 816 4 325 625 CFR Marfă 25 364 472 25 364 472 0 Total 518 728 615 408 577 686 110 150 928

(83) Following the approval of the Reorganisation Plan, significant debt write offs already took place. Romania informed in its submission of October 2015 that around RON 2,358 billion (EUR 518 million) of debts were cancelled in the period April-October 2015) (44).

(84) The Romanian authorities informed also that an offer to sell Oltchim SPV was sent to all bilateral Chambers of Commerce in Romania (July 2015) and to other 30 Chambers of Commerce worldwide (in September 2015). First meetings with potential purchasers took place in September/October 2015.

3. THE COMMISSION DECISION TO OPEN THE FORMAL INVESTIGATION PROCEDURE

(85) On 8 April 2016, the Commission decided to open the formal investigation procedure. The Commission raised doubts as to three support measures: (1) Measure 1: the non-enforcement and further accumulation of debts by AAAS since September 2012. Despite the firm commitment given to the Commission in 2012, the Romanian authorities did not convert the accumulated debt towards AAAS (RON 1 049 million, i.e. circa EUR 231 million at that time) into equity and did not privatise Oltchim. Instead, Oltchim continued its business activities and accumulated more public debts, including towards AAAS (the debt towards AAAS rose from RON 1 049 million to RON 1 201 million i.e. from circa EUR 231 million to circa EUR 264 million). AAAS did not enforce its claims against Oltchim after the privatisation failed in September 2012. It did not ask for the reimbursement of its claims by means of an immediate liquidation of Oltchim but instead waited for the debt to equity conversion to take place, even though Oltchim's privatisation process failed again. (2) Measure 2 (45) : the support of CET Govora and Salrom to the operations of Oltchim in the form of continued supplies between September 2012 and January 2013. After the failed privatisation in September 2012, Oltchim's financial situation deteriorated and the production was suspended. The Romanian authorities took various support measures to allow Oltchim to restart its production. This restart of the production would not have been possible without the decision of the publicly owned suppliers of Oltchim — CET Govora and Salrom — to continue supplies to Oltchim despite its non-payment of debts. — CET Govora signed a new electricity contract with Oltchim on 15 September 2012 and then agreed to increase electricity supply first as from 25 October 2012, then as from 12 November 2012 and then to further continue supplies as from 1 January 2013. These changes in the contractual relationship with Oltchim seemed to have been taken in the implementation of several decisions issued by the Vâlcea County Council to ensure electricity supply to Oltchim. — Salrom accepted postponement of payments for its supplies and therefore accepted a further increase of Oltchim's debts towards it. (3) Measure 3 (46) : the approval of AAAS and SoEs (47) of debt cancellation under the Reorganisation Plan in 2015; AAAS, Salrom, CET Govora, the National Water Administration, and Electrica all voted in favour of the Reorganisation Plan. As a result, AAAS agreed to cancel EUR 216 million of its claims towards Oltchim in view of the future (uncertain) recovery of EUR 47 million. Salrom agreed to cancel EUR 4,2 million of debt, CET Govora SA agreed to cancel EUR 21,1 million of debt, National Water Administration agreed to cancel EUR 2,2 million of debt, and Electrica agreed to cancel EUR 112 million of debt. In return, those SoEs expect the following debt coverage in case the sale succeeds: EUR 2,5 million for Salrom, EUR 8,9 million for CET Govora SA, EUR 0,9 million for National Water Administration, and EUR 32 million for Electrica (see Tables 4 and 5).

(86) In the opening decision, the Commission took the preliminary view that the above described measures entailed State resources and were imputable to the State. Additionally, given the unlikelihood that any rational private operator would have provided Oltchim with these measures, the Commission also took the preliminary view that the measures provided Oltchim with an undue advantage; such advantage would be selective, given that Oltchim was its sole beneficiary.

(87) The Commission also noted that the measures were likely to affect trade between Member States as Oltchim was in competition with other chemical producers from other Member States as well as from the rest of the world. The measures enabled Oltchim to continue operating so that it did not have to face, as other competitors, the consequences that would normally follow from its poor financial results.

(88) The Commission also expressed doubts on the compatibility of the measures, in particular since the Romanian authorities did not provide any possible compatibility grounds. The Commission's preliminary view was that Oltchim could be considered a firm in difficulty in the sense of the 2014 Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty (‘2014 R&R Guidelines’) (48), in particular in view of insolvency proceedings initiated on 30 January 2013. However, the criteria for compatible rescue or restructuring aid laid down in the R&R Guidelines seemed not to be complied with by any of the measures. In particular, in the absence of a notified restructuring plan (the Romanian authorities do not claim the eligibility of the measures as restructuring aid), the Commission could not evaluate the components of the Reorganisation Plan, including investment and modernisation measures, nor evaluate whether the measures would restore long-term viability and would be kept to a minimum, so that undue distortions of competition would be avoided.

(89) On the basis of the above, the Commission's preliminary view was that the measures seemed to constitute State aid within the meaning of Article 107(1) TFEU. Also, since the measures would have been granted in breach of the notification and stand-still obligations laid down in Article 108(3) TFEU, the Commission noted that they appeared to constitute unlawful State aid. In the absence of notification of the restructuring plan to the Commission, such measures could not be declared compatible with the internal market.

4. COMMENTS ON THE OPENING DECISION

4.1. Romania's submissions

(90) In its comments on the Commission's opening decision, Romania submits a number of observations pertaining to each of the three Measures described above.

4.1.1. Romania's comments regarding Measure 1

(91) Romania claims that in the period September 2012 — January 2013 AAAS behaved like a private creditor and that AAAS non-enforcement of claims was fully justified in this short period of 5 months due to both legal and de facto limitations:

(92) The legal limitations relate to the effects of the so-called special administration procedure (Article 16 paragraph (5) (c) of the Romanian law No 137/2002) under which the tax-and-contributions creditors cannot execute their debts as long as the company is prepared for privatisation. This allegedly prevented AAAS from asking the immediate execution of its debt within the context of the privatisation process kept in place by the Ministry of Economy, Trade and Business Environment, even after the privatisation failure in September 2012. Romania also argues that the lack of sellable assets not used as collateral for secured creditors de facto limited AAAS's ability to enforce its claims and would also explain why private creditors did not execute their claims either. In that respect, Romania brings forward the example of private bank Banca Comercială Română which did not activate the forced execution process and even granted additional funding amounting in total to approximately EUR 1 million in favour of the re-commissioning of the polyols-polyether section and of a consultancy study on the opportunity of restarting Oltchim's activities.

(93) Furthermore, Romania submits that AAAS' absence of request for the immediate execution of its debt was also motivated by the initiation of a pre-notification process to the European Commission from Romania in relation with a rescue aid (aid that subsequently turned out not to be compatible with the ‘one time last time principle’ of the 2014 R&R Guidelines).

(94) Romania notes that, based on the Raiffeisen study, notwithstanding deductions to be done in relation with environmental liabilities, AAAS would have recovered 10 % rather than 12 % of its debt in the liquidation scenario because AAAS claim towards Oltchim was almost 1,2 as high as the one considered by Raiffeisen in 2011 when it had to compare the market and liquidation values of Oltchim. In its submission of May 2018, Romania goes even further, claiming that in case of bankruptcy the environmental liabilities to be paid with priority in Oltchim's case would have exceeded the total receipts expected from a forced sale corresponding to a liquidation scenario, and concludes that the degree of recuperation of AAAS' debt would have been zero.

(95) Romania submits that AAAS concentrated on obtaining detailed information on Oltchim's situation at that time in order to be able to take a well-documented decision and that the few months between the privatisation failure and entering into insolvency was acceptable as a period of reflection.

(96) Lastly, Romania notes AAAS had been charging Oltchim interests at the market level until the insolvency proceedings. According to Romania, this proves the non-immediate execution of its claims does not constitute State aid, which Romania claims is in line with the approach followed in the 2012 Commission decision in paragraphs 98 et subseq. Romania further submits that the only further accumulated debt stems from interest to an already existing debt, which is of minor importance in case the recuperation of the main debt is totally unrealistic in the first place.

4.1.2. Romania's comments regarding Measure 2

(97) In Romania's view, when deciding to continue supplies and to favourably modify trading conditions, CET Govora and Salrom ‘behaved like private creditors as long as they guaranteed (secured) the newly created debt’ and because their decisions to deliver raw materials required for the restarting of Oltchim's activity were similar to the ones made by certain privately-owned companies. This decision allegedly follows from the likelihood of recovering a larger amount of the debt in case the activity is started. Furthermore, Romania states that, due to their technological interdependence regarding the supply of industrial and respectively demineralised water to Oltchim, Salrom (albeit less distinct) and CET Govora acted as rational essential suppliers. As Oltchim amounted to 14 % of Salrom's turnover in 2015 and to 39 % in CET Govora's revenue, there was no practical solution to substitute Oltchim's purchases of industrial steam for CET Govora.

(98) Regarding Salrom, Romania also states that it received total payments of more than RON 33 million after Oltchim's going insolvent, conditioning any further supplies to Oltchim after Oltchim's entry into insolvency on advance payments, a condition that was agreed and complied with by Oltchim following negotiations.

(99) Regarding CET Govora's supply, Romania claims that the electricity and steam selling price to Oltchim is market conform and has been paid in full from 1 February 2013 to 31 March 2016 (RON 476 million).

4.1.3. Romania's comments regarding Measure 3

(100) Romania claims that the positive vote of AAAS and SoEs complied with the Market Economy Creditor Principle (MECP) as summarised below.

(101) First, Romania supports that the value of the Oltchim bankruptcy scenario is negative. To support its view, Romania quotes the values provided in the evaluation reports by Romcontrol of February 2009 (EUR – 281 million) and, respectively, December 2010 (EUR – 407 million). In addition, it quotes Winterhill's estimate of recovery under the liquidation scenario amounting to circa EUR 108 million for secured assets and EUR 32 million for the assets free of encumbrance (from the latter, EUR 22,2 million would had been deducted as severance payments for laid-off employees).

(102) With reference to recital 120 of the Opening Decision, Romania adds that the environmental liabilities encompassed in the Winterhill report only relate to the cleaning and preparation of the assets for sale and do not include the closure of non-hazardous waste repository and hazardous waste pit as well as the decommissioning and demolition of the equipment and building, and restoration of the ground and environment to the initial state. Environmental liabilities estimated by Oltchim amount to c.a. EUR 464 million and would thus exceed the proceeds estimated by Winterhill for unsecured creditors in the liquidation procedure.

(103) Thus the likelihood of obtaining any payment by AAAS and SoEs from Oltchim was considerably higher in the reorganisation procedure.

(104) Second, Romania submits that a debt recovery by the initiation, by AAAS and Electrica, of the Oltchim bankruptcy procedure was not possible, because the requirements of Article 1(2) of the insolvency law in this sense were not fulfilled.

(105) Third, Romania submits that even though the AAAS MECP study was prepared before the reorganisation plan was approved at the creditors meeting on 9 March 2015, the study conducted by AAAS is adequate and sufficient to consider the decision of AAAS to approve the reorganisation plan as similar to a private creditor. The dismissal of the plan would have led the bankruptcy, which would have implied no recovery of debts, considering the low portion of AAAS's debt that was secured and the large value of the environment obligations in the case of land ecological works for greening of land. Thus, the study conducted by AAAS in this regard demonstrated that AAAS would have recovered more in case of the approval of the reorganisation plan than in the liquidation of Oltchim where the environmental liabilities apply with priority on the basis of the Ordinance No 195/2005.

(106) Romania considers that the recovery of 20 % of AAAS debt following the implementation of the reorganisation plan was a credible estimate at the time of the vote.

(107) Fourth, Romania underlined that the request for dismissal of the reorganisation plan of three creditors was rejected by the national court through the Decision No 892 of 22 April 2015. This judgment confirmed that the reorganisation plan better served the creditor's interest than the bankruptcy scenario, notably based on the estimate of an amount of senior environmental liabilities of 464 million EUR, which significantly exceed Winterhill's estimate of recovery under the liquidation scenario of about EUR 108 million for secured assets and EUR 32 million for the assets free of encumbrance.

(108) Romania submits that the tax and unsecured creditors and the other State-owned enterprises such AAAS, Electrica acted as market operators in opting for the reorganisation plan rather than the liquidation of Oltchim: they acted like private companies, such as Erste Group Bank AG and Bulrom Gas Impex SRL, having both secured and unsecured debt, and which also approved the plan. Romania also submits that before the beginning of the insolvency proceedings, Salrom raised the condition of establishing a real estate security to become a secured creditor.

(109) Fifth, in its submission, Romania indicated that Electrica took all the actions allowed by the law in order to recover its debt in the insolvency proceedings, so as to avoid dependence on a reorganisation plan. These actions were however dismissed by the Romanian courts. Therefore, the vote for the Plan was the last available resort, which shows that Electrica acted like a MEO. The affirmative vote expressed on the reorganisation plan was the only option of debt recovery available to the creditors for Electrica who was registered both as secured and unsecured creditors.

(110) Romania claims that a market economy operator/creditor would have opted for the reorganisation plan as it is the modality that, usually, in the Romanian insolvencies and in those known by Electrica, offers higher chances for debt recovery: Romania stresses that the official receivers in charge of elaborating the plan have a legal obligation to maximise the debtor's assets and may be held personally liable in case they do not obtain the best result for the creditors.

(111) Romania also explained that the report corroborated with the Plan indicated in a plausible manner that the only potential chance of Electrica to recover some of the debt owed to it was through the reorganisation. In Romania's view, it is unreasonable to claim that Electrica should have undertaken the high expenses of a separate study in order to confirm the aspects stated by well-known professionals, confirmed by the national courts and indicated by economic experience: the costs with the fulfilment of Oltchim's environment obligations in the bankruptcy proceedings would have made less likely, if not even impossible, the recovery of any amount by Electrica of its claims against Oltchim.

(112) By comparison, the potential recovery of RON 160 million for Electrica offered by the Reorganisation plan, even if associated with a longer time interval and some risks, was definitely the preferable solution, as also demonstrated by the actions of other private creditors, like Erste Group Bank AG.

(113) Romania states that Salrom and CET Govora's vote against the reorganisation plan would have led to the absence of recovery for them for their unsecured portion of debt; thus, it was the best choice for them to approve the restructuring plan in which secured creditors accepted debt write-offs in exchange for a partial recovery for their unsecured debts.

4.2. Comments from interested third parties

(114) Four interested parties commented on the opening decision — PCC (a minority shareholder in Oltchim), Electrica, the consortium of judicial administrators Rominsolv and BDO (in charge of the judicial administration of Oltchim) and another interested party that wished to remain anonymous.

4.2.1. Rominsolv and BDO (‘R/BDO’, the official receivers of Oltchim in the insolvency proceedings)

(115) Rominsolv and BDO are the official receivers of Oltchim that drafted the Reorganisation Plan, which was later on approved by Oltchim's creditors. They submit a number of arguments in favour of the reorganisation plan.

(116) As regards Measure 1, R/BDO claim that: — The Commission was wrong to rely on the liquidation value from the Raiffeisen report, as this report relies upon the hypothesis of ongoing business and does not take into account the environmental obligations associated to the liquidation scenario. Therefore, the Commission's assessment that in 2012 AAAS would have recovered 12 % of its debt through Oltchim's liquidation is wrong. — Other means to recover debts (i.e. through enforcement procedures) were not possible for AAAS, as AAAS did not have an enforceable title and could not obtain one in such a short timeframe (September 2012 - January 2013). — Furthermore, in September 2012, Oltchim's patrimony no longer included assets that could be pledged in exchange for the debt value. — Lastly, R/BDO name a number of private parties (49) who in that period, despite deteriorating financial position of Oltchim, continued cooperation and gave support to Oltchim. Only two (50), out of a total of 205 parties registered on Oltchim's creditors' list initiated enforcement measures against the debtor.

(117) As regards Measure 2, R/BDO claim that: — CET Govora's level of involvement in the resumption of Oltchim's business was relatively limited, with the accrued debt for electricity and steam supply reaching the amount of approx. RON 25 million (compared to the total debt of RON 84,2 million on 31 August 2012). Furthermore, CET Govora calculated delay penalties according to the agreements with Oltchim stemming from the past debts, which should not be considered as a part of a support for the resumption of production. — Salrom's level of involvement in the resumption of Oltchim's business was also relatively limited, with the accrued debt for product delivery invoices of only RON 1,8 million. The remainder of RON 13,2 million represents delay penalties calculated according to the agreements with Oltchim stemming from the past debt, which should not be considered as a part of a support for the resumption of production.

(118) Finally, BDO contends that the Commission ignored the importance of technological interdependence of 4 large players (Oltchim, CET Govora, Uzinele Sodice Govora and Salrom), whose activities is technologically dependent, each of them being a supplier and a utility client of the other, at the same time.

(119) As regards Measure 3, R/BDO claim that: — The Commission has not met the requisite standard of proof for demonstrating the imputability to the State of the decisions of a number of SoEs (i.e. CET Govora, Romanian Waters, Salrom, Electrica) and AAAS to vote in favour of the Reorganisation Plan. — The official receivers who prepared the Reorganisation Plan are bound by the principles of independence, with a view to ensure an efficient procedure, the equal treatment of creditors, a high degree of transparency and the maximisation of the degree of recovery claims. The Plan prepared by them met all standards provided in the Romanian law and was approved by the judge. Therefore, it is unreasonable to expect that all creditors would invest separately their time and resources in preparing separate assessments for the recovery of their claims as the Commission seems to imply. — The Commission was wrong to assume that Winterhill Report in its estimations of LV of Oltchim took into account all environmental obligations of Oltchim. The Report took into account only the normal costs of dismantling equipment, but not the costs stemming from environmental liabilities. Therefore, the Reorganisation Plan was correct to assume that in case of bankruptcy (liquidation) the value of recoverable claims was zero for all the creditors. — Finally, based on the number of economic indicators showing the improving economic situation of Oltchim in the insolvency proceedings it was not unreasonable to believe that Oltchim SPV can be successfully sold on the market for the estimated price of EUR 306 million. — Lastly, R/BDO submit that the EUR 306 million calculated by Winterhill in 2013 is erroneous but had been rectified in the report submitted with the creditors in view of their meeting on 4 December 2014 that showed an expected sale price of EUR 295 million.

4.2.2. Electrica

(120) Electrica claims the lack of imputability of its decision to vote in favour of the plan to the State. It says that the decision to vote on the Plan was delegated by the Shareholders Meeting to the General Manager of Electrica SA who was the only responsible person for the positive vote on the Plan. Therefore, according to Electrica, Measure 3 cannot be imputable to the State.

(121) Furthermore, Electrica claims, that even if the decision could have been considered as stemming from State powers, it was a sound business decision in line with the MECP. In essence, Electrica believes that its decision to support the Plan did not confer any advantage to Oltchim; in their opinion this is confirmed by similar behaviour by other private creditors in a situation comparable to that of Electrica who also voted in favour of the Plan.

(122) Electrica also submits that it did not carry out a market economy creditor study because R/BDO had a legal obligation to advise the creditors how to maximise their proceeds.

4.2.3. Confidential [anonymous] interested third party

(123) The anonymous party supports the Commission's doubts. It further outlines the distortive effects of the support measures, in particular in the market for chlor-alkali products (caustic soda). Anonymous party believes that the proposed solution to sell Oltchim is a dead-end: the multiple failed attempts to sell Oltchim show the market's lack of interest in Oltchim; the contemporaneous financial reports of Oltchim show a level of profitability that is far too low to make the business sustainable in the long term. In this context, the only viable solution for Oltchim would be a full restructuring of the business in the form of plant closures, capacity reduction and possibly market exit.

(124) The anonymous party also points out that a significant part of the profits achieved by Oltchim in 2015 and those anticipated for 2016 were generated through sales of caustic soda whose selling price is cyclical and in 2015 reached ‘top of cycles’ levels. Furthermore, Oltchim's operating rates are exceptionally low (30 % of overall capacity utilisation which compared to average levels of 80 % in the EU chlor-alkali industry is very low). Therefore any potential buyer would need to undertake very significant further investments, which is at odds with Oltchim's low EBITDA.

4.2.4. PCC

4.2.4.1. PCC's comments regarding Measure 1

(125) According to PCC, if AAAS had acted as a private creditor, he would have favoured the execution of its claim towards Oltchim following the failure of the privatisation process in September 2012: this would have led AAAS to recover 12 % of its claim rather than opting to wait for an uncertain recovery during the whole reorganisation procedure.

(126) PCC claims that after the privatisation failed in September 2012, it was even clearer that there is no market interest to buy Oltchim. Waiting few more years for the elaboration of some restructuring plan and then few more years for its implementation put at high risk the market value of Oltchim's assets. With the passage of time Oltchim's assets were becoming more outdated and useless.

(127) PCC submits that AAAS should have used the specific Romanian legislation on the recovery of public debts accrued towards the Ministry of Finance stemming from the state guarantees (Ordinance 29/2002) which provides that the recovery agreements transferring the state guarantees from the Ministry of Finance to AAAS are recognised by the virtue of the law as enforcement titles. Therefore, in PCC's view, any execution of those enforcement titles could have been carried out by AAAS without any additional formalities. AAAS had at its disposal various enforcement methods for those receivables as provided by the Government Emergency Ordinance No 51/1998 on the realisation of State assets.

(128) Moreover AAAS within the secured State creditors did not seem to require the lifting-up of the suspension of its enforcement rights within the insolvency procedure, in opposition to a failed attempt to do so from Electrica. As such, AAAS did not use all the legal instruments available to it to deal with the undertaking's failure to make a payment.

4.2.4.2. PCC's comments regarding Measure 2

(129) PCC considers that CET Govora and Salrom did not act as market economy operators in continuing supplies to Oltchim despite non-payment of outstanding debts and that their decisions were imputable to the State.

(130) Contrary to Electrica and Electrica Furnizare, CET Govora indeed decided to continue Oltchim's electricity and industrial steam supply, even though Oltchim did not pay its debt towards it and against the opposition of its own banks; such a decision led to CET Govora's own insolvency on 6 May 2016: PCC indicates that according to the judicial administrator of CET Govora CET Govora has been subsidising Oltchim.

(131) PCC argues that CET Govora's decision to restart their supply to Oltchim following the failure of the privatisation in September 2012 is imputable to the State. In PCC's view, CET Govora's decision to continue Oltchim's supply occurred following the related decisions of its owner — the Vâlcea County Council, while Oltchim's incapacity to pay was widely known. PCC also quotes CET Govora's trustee underlying that ‘the decision to deliver electric power to Oltchim had no economic rationale and was politically motivated and is an excellent example of the political interference in the management of the debtor […]’.

(132) While recognising that Oltchim was an important client for Salrom, PCC argues that a market economy operator would not have continued supplies to Oltchim considering Oltchim's financial situation; the potential liquidation of Oltchim would impact only one branch of Salrom with only 60 working places being affected. Therefore, any private creditor in a similar situation as Salrom, would not have accepted the accumulation of debts, but would have rather accepted the decrease of its turnover to keep its company healthy.

(133) PCC argues that Salrom's decision to restart its supply to Oltchim following the failure of the privatisation in September 2012 is imputable to the State who controls Salrom; the board of director of Salrom is indeed nominated by the general meeting of shareholders in a context where the Romanian State holds a majority (51 %) of Salrom's shares and name State representatives within the board of directors.

4.2.4.3. PCC's comments regarding Measure 3

(134) PCC argues that by accepting the debt write-off instead of enforcing their claims, AAAS, CET Govora and Electrica did not behave as market economy creditors.

(135) PCC claims that the Reorganisation Plan approved by the creditors lacks the elements of real restructuring (51) and is basically limited to a sole debt restructuring and liquidation. PCC claims that a reorganisation plan prepared by the shareholders may have been a better option but was not implemented despite its proposals, as it was not approved by the Romanian authorities.

(136) Without long-term restructuring measures of the core business of Oltchim there are no chances that Oltchim remains viable and profitable.

Market value

(137) On the one hand, PCC underlines that the market value established in 2013 by Winterhill Romania was very uncertain and that a careful market economy operator would not had considered it as correct when determining its position on the Reorganisation Plan two years later in April 2015.

(138) Past numerous failed attempts for Oltchim's privatisation in 2001, 2003, 2006, 2007, 2008 and 2012 were clear indications according to PCC that no investor would be interested in acquiring shares in the privatisation through the creation of a SPV put forward by the judicial administrators. PCC adds that the price set for the privatisation is not substantiated and cannot be considered as a reliable ground for approving the plan. In PCC's view, the plan is just a way of keeping unprofitable business alive and postponing in time an effective bankruptcy of Oltchim.

(139) PCC also argues that the price for Oltchim would most probably have declined between 2013 and 2015 as facilities not having worked for 2 years would be impossible to restart. Thus, Bradu's site only value could be their land, notwithstanding attached environmental liabilities.

(140) In its support, PCC quotes the price offered in the unsuccessful privatisation process in 2012 by an individual (Mr Diaconescu) of approximately EUR 45 million, that is six times less than the price estimated for Oltchim by Winterhill. Similarly, a representative of Chimcomplex that lodged an offer in 2016 for the acquisition of the functional assets of Oltchim — stressed in 2016 that Oltchim's value is significantly lower than the price requested through the Reorganisation Plan.

(141) PCC underlined that the decisions of the public creditors took place in a context where Oltchim remained non profitable in the absence of a real restructuring plan; besides, the profits recorded by Oltchim were artificially generated by the debt write-offs and did not testify of an improvement of Oltchim's financial situation. The positive results in the financial statements would be a mere result of various accounting methods. According to an independent report commissioned by the […] company on PCC's behalf, Oltchim has been continuously recording losses between 1 January 2013 and 30 June 2016 after neutralising exceptional elements (such as the 2015 debt write-off) due to unproductive assets such as Bradu petrochemical unit, VCM and PVC. This reports also concludes that the value of tangible non-current assets at 31 December 2015 representing more than 84 % of Oltchim assets should be between EUR 14 million and EUR 128 million depending on the expected sale of Oltchim SPV between December 2013 and December 2014 as well as on the scenario (A or B) foreseen in the Reorganisation Plan prepared by the Court-appointed receivers (52), which is below the liquidation value estimated by Winterhill (EUR 141 million).

Liquidation value

(142) According to PCC, the comparison of the market value of Oltchim estimated with its liquidation value was flawed for the following reasons.

(143) Firstly, other alternatives existed, such as the ongoing sale of Oltchim in asset bundles.

(144) Second, the amount of environmental liabilities calculated by Oltchim (EUR 463,7 million) in the liquidation scenario seems exaggerated to support the Reorganisation Plan instead of the liquidation of Oltchim, as they do not rely on external, independent reports. There is no information relating to the reason why the judicial administrators did not request a new study. Such environmental liabilities estimated by Oltchim in the liquidation scenario would also have to be taken into account by the potential purchaser of Oltchim SPV in his offer. Lastly, PCC supports the view of the Commission that in the liquidation scenario, a large part of the assets may be bought by a purchaser pursuing industrial activities at Oltchim's site, thus avoiding the integral demolition of the site assumed by this estimate. By contrast, PCC underlines the uncertainty attached to the amount of environmental liabilities left in Oltchim in the 2015 Reorganisation Plan.

Comparison between market and liquidation value

(145) Third, in a context where new claims after Oltchim's entry into insolvency procedure get a senior status compared to pre-existing debt, certain creditors could have had the interest to request the entry into liquidation phase of Oltchim rather than wait for the accumulation of such new debt which would have reduced their recovery chances. PCC also claims that the debt incurred by Oltchim after it has entered into insolvency procedure may have been underestimated. If this were true, this would have led thus leading to diminished recovery perspectives and therefore increased debt write-offs for the creditors in the Reorganisation Plan scenario.

Other observations on Measure 3

(146) Furthermore, PCC claims that State creditors should have also taken into account the duration of the reorganisation phase versus the duration of the bankruptcy proceedings. Preparation of a viable restructuring plan and its implementation takes much longer than the liquidation of Oltchim via an immediate sale of assets.

(147) Besides, State creditors should have taken advantage of their situation. — According to the Romanian insolvency law (Article 94(c)), one or more creditors holding at least 20 % of all claims can propose a reorganisation plan. Given that AAAS alone held 34,7 % of all claims, it could have had proposed a different plan with a better outcome for AAAS and other State creditors. — While it represented 91 % of the unsecured creditors category under Article 96 of the insolvency law, CET Govora had a privileged situation to impact the Reorganisation Plan that it did not seem to have used. — Salrom and Romanian National Water Administration did also approve the plan in the two categories of debt they each detained, whereas their status could have led them to enforce their claims as a secure creditor and respectively a state budget creditor.

(148) Lastly, PCC indicated that although there were some private creditors in a similar situation as the State who voted in favour of the Reorganisation Plan, it would be wrong to infer that State creditors including AAAS were in a situation similar to a prudent market operators because of the positive vote of some private creditors on the Plan: in opposition to the latter ones holding both secure and unsecured debt, almost all AAAS debt was indeed unsecured; moreover those private creditors knew that the Romanian State would take all necessary measures and steps to ensure at all costs the survival of Oltchim and therefore they decided to ‘join’ the State in those efforts.

(149) It is the opinion of PCC that Measure 3 is imputable to the State as the restructuring plan could not have been approved without the consent of the State creditors which had the majority of votes (higher than 50 %) in the majority of categories of creditors: the State did indeed control the decision in all categories of creditors except the secured claims and the employee category. As such, the private creditors that approved the Reorganisation Plan were more acting like followers of the State decision rather than the promoters of such a Reorganisation Plan. PCC further states it is ‘aware there are private creditors that apparently adopted the same approach as the State (i.e. also voted in favour of the plan although apparently it was not in their favour, as they had large write-off).’ However, PCC is of the opinion that ‘it is the State that created this ‘market practice’ and not the other way around (the State following the trend). This is because it controlled Oltchim before insolvency, it controlled the vote on the [R]eorganisation [P]lan, and because it was obvious to the other creditors the State would take all measures to ensure at all costs the survival of Oltchim.’

4.3. Comments from Romania on the observations from third parties (53)

4.3.1. Romania's further comments regarding Measure 1

(150) Romania considers that AAAS acted as a private creditor ‘legally limited’, by calculating interests until Oltchim entered the insolvency procedure and rejects PCC's allegation regarding the lack of action from AAAS towards the execution of its claims. Romania indeed states that the Memorandum was proposed by the Ministries of Public Finance and Economy, Commerce and Environment as well as OPSPI. As to the de facto limitations, Romania explains that AAAS was unable to garnish bank accounts (i.e. perform a seizure on them) as the latter were already garnished by Electrica before.

(151) Romania criticises the logic of PCC's argument that AAAS should have asked for the execution of its claim: in such circumstances, Oltchim would then have been led to start an insolvency procedure. That very situation would have precluded AAAS from any recovery under such a procedure as claimed by PCC.

(152) Romania qualifies PCC's opinion where it claimed that AAAS should have seized Oltchim's goods and assets as unrealistic based on the fact that private creditors did not apply it.

4.3.2. Romania's further comments regarding Measure 2

(153) As far as CET Govora and Salrom are concerned, Romania states that post insolvency current liabilities were being paid without any delay by Oltchim.

(154) In Romania's view, public companies did act as private companies, such as Bulrom Gas Impex (a local supplier of Oltchim) and thus their behaviour was compliant with the private creditor and private purchaser test.

4.3.3. Romania's further comments regarding Measure 3

(155) Firstly, Romania states that the solution evoked by PCC in its submission to design a reorganisation plan managed by shareholders could no longer be applied under insolvency law, following the triggering of judicial reorganisation procedure; according to Romania, PCC's proposed reorganisation process would favour shareholders to the detriment of creditors and thus not receive approval from the latter ones.

(156) Romania contests PCC's vision of Oltchim's financial situation as ‘below acceptable standards […] still generating losses’ and underlines Oltchim has been ranked 63rd out of 100 in the ranking of the most profitable companies in the South-Eastern Europe performed by SeeNews (54).

(157) Regarding Oltchim's asset valuation performed by […] and communicated by PCC, Romania does not contradict […]'s normalisation adjustment related to the debt write-off, but notably rejects the use of discounted cash-flow (DCF) methodology with the purpose of valuing Oltchim's assets. Romania refers to training materials from Harvard and Stern universities to support the fact that DCF are targeted at company valuation and as such not appropriate for assets valuation.

(158) Romania also rejects the idea supported by PCC that the conduct of private creditors would have been influenced by AAAS as at least two of the signatory bank (namely Erste Bank AG and Banca Transilvania) are well-established, independent, worldwide institutions.

(159) Romania underlines that private creditors are essentially the ones that had the key decision regarding Oltchim's Reorganisation Plan, in particular, as they represented 61,5 % of the secured creditors that had a decisive role by approving a partial write-off, indispensable for the approval of the plan by each category

(160) Romania submits that the expectations of recovery for the public entities under the Reorganisation Plan proposed by the judicial administrator amounted to RON 500 million, i.e. 7 times higher than a potential recovery of RON 72 million under the bankruptcy procedure.

(161) Furthermore according to Romania AAAS was notably able to recover more than 18 % of the total of its receivable in the restructuring plan compared to only up to 12 % in the liquidation based on Raiffeisen study.

(162) Romania also states that according to Oltchim's judicial administrators' opinion that, in case of bankruptcy, the avoidance or underestimation of environmental costs would be a criminal liability according to Romanian law.

(163) Romania argues (55), that the vote rules imply that the Reorganisation Plan could not be adopted without the approval of the secured creditors as a disadvantaged category based on the law. Therefore, these are the private creditors, who held a majority under the secured lenders' category, that initiated and allowed the adoption of the plan; as such, they did not act as simple followers of the State creditors as stated by PCC Romania specified (56) that secured creditors were a disadvantaged category. As such, in the event that they would have rejected the plan, the condition set out in Article 101(2)(c) of the insolvency law would not have been met, preventing other categories from achieving an adoption of the Plan.

(164) Romania also underlines the difference between the past failed privatisation attempts and the process led in 2012 that relied on the sale of Oltchim's asset transferred to a SPV, meaning that the buyer would not have purchased Oltchim's entire balance-sheet including liabilities but only its assets.

(165) Romania states that the value of current debts is decreasing due to the generation by Oltchim of a positive EBITDA.

(166) Besides, Romania contests the view from the [anonymous party] stating that Oltchim would be ‘structurally unprofitable’: Oltchim's difficulties would rather mainly be caused by bad management decisions.

(167) In its submission dated on 16 May 2018, the Romanian authorities emphasised the following elements, in addition to the above.

(168) First, there was no advantaged granted by State creditors to Oltchim because they could be considered as acting pari passu along with private creditors in all the secured creditors, budgetary creditors, essential suppliers and unsecured creditors categories.

(169) In particular, a majority of secured creditors voted for the Plan because they were convinced that they would not obtain an amount fully covering their own claims in the liquidation scenario. The mere fact that AAAS had claims both in secured and budgetary categories would not affect this pari passu observation as AAAS could only expect to receive more in the Plan than in the liquidation scenario.

(170) The fact that the secured creditors voted in favour of the Plan accepted a write off in the Plan implied that the claims of the budgetary creditors were worthless in the liquidation scenario. In particular, so as to ensure a positive vote of the latter on the Plan, the secured creditors accepted to limit their part of the proceeds (by agreeing to a de facto cancellation of their claims of 20 % to 27 %) in favour of the inferior categories that would have received nothing in case of liquidation.

(171) The positive vote of a majority of unsecured creditors (40,5 % of the claims of whom were hold by Electrica) also proves their confidence in the plan, although their vote was of limited significance as they could not expect any claim in the liquidation nor in the Reorganisation Plan scenario.

(172) Second, the Romanian authorities who were given the opportunity by the Commission to comment on a draft MEO test prepared by the Commission from the viewpoint of secured, budgetary, essential suppliers and unsecured creditors based on available contemporaneous evidence (the final version of which is in Annex I to this decision) submitted different observations in that respect. In particular, the Romanian authorities relativise the difference between the sale of Oltchim SPV foreseen in the Reorganisation Plan and the in situ sale considered by the Commission as one of three possible liquidation scenarios. Romania stresses that the liquidation scenario could not be expected to get to higher proceeds than the Reorganisation Plan. Lastly, Romania submitted different technical comments on the way a market economy creditor would have estimated proceeds and costs in both Reorganisation Plan and liquidation scenario, save the environmental liabilities for which Romanian contests the neutralisation thereof.

(173) Third, on the whole, the option chosen by creditors, namely to vote in favour of the Plan was to their obvious benefit as the proceeds obtained from the sale through asset bundles of the operational assets — even if they represented only 57 % — brought a lot more advantages than the average scenario in case of bankruptcy. In addition to the above-stated, additional amounts were to be obtained from the sale of the remainder 43 % of the assets and, as a result thereof, their benefit would be superior in the reorganisation proceedings. Furthermore, it is forecasted that Oltchim would pay around 8 million euro from its current debt during the first half of 2018, which would mean a lower current debt and higher distribution to creditors as part of the reorganisations proceedings.

5. SALE PROCESS OF OLTCHIM'S ASSETS

(174) In its Opening Decision (see recital 85), the Commission found that the sale process as set out in the initially approved Restructuring Plan could lead to economic continuity between Oltchim SA and a possible acquirer of Oltchim SPV. In order to prevent any transfer of possible incompatible State aid to the buyers of Oltchim's assets, the Romanian authorities decided to restructure the sale process so as to ensure economic discontinuity between Oltchim and its potential buyers.

(175) Specifically, in July and August 2016, with support from advisers, Oltchim conducted an analysis of its assets and identified options for a granular offer of assets in view of maximising the potential accumulated sales price. This led to the identification of 9 asset bundles (57). Following the public announcement of Oltchim's sale during August 2016, an Information Memorandum was distributed to 23 bidders and the deadline for submission of Binding Offers was several times prolonged, with further due diligence (including site visits and technical due diligence).

(176) The revised Plan relying on a sale through asset bundles (and no longer through a SPV) was formally accepted by the General Meeting of the Creditors on 6 March 2017. The syndic judge confirmed the amended Reorganisation Plan on 28 June 2017 and its decision became final on 16 October 2017 (when an appeal introduced by a third party was rejected by the superior court).

(177) Following the receipt of binding offers, the Seller (AT Kearney on behalf of Oltchim) identified the following potential combinations of binding offers with the highest aggregate value for the Creditors: — White Tiger Wealth Management for all asset bundles except for 2 and 6 for a total price offer of EUR […] million. — Chimcomplex for assets bundles 1,2,3,4, 5 and partially 7 for a total price offer of EUR 127 million, Dynamic Selling Group (‘DSG’) for asset bundle 6 for a total price offer of EUR […] million (later revised), and International Process Plants and Equipment (IPP) for bundles 8 and 9 for a price of EUR […] million.

(178) The Creditors Assembly Meeting took place on 18 December 2017 and approved the Assets Sale Agreement with Chimcomplex while rejecting all other offers (58). Given that the decision of the Creditors Assembly was challenged in court, the new the initial long-stop date was postponed until 17 October 2018.

(179) As regards bundle 6, the sale price was renegotiated with DSG and increased from EUR 1,9 million to EUR 2,6 million. On this basis, an asset purchase agreement was signed on 1 February 2018. The sale was approved by the Creditors Assembly on 26 February 2018 and completed on 12 June 2018.

(180) With respect to the remaining unsold assets (bundle 7 — PVC processing, bundle 8 — petrochemical plan Bradu, bundle 9 — phthalic anhydride and certain individual assets of asset bundle 7 — VCM/PVC) the Creditors Assembly tried to