Romanian businessman Dorinel Umbrarescu, so far active in the road construction industry, took over the insolvent steel mill Otelu Rosu for EUR 12 million and plans to resume operations this autumn, according to local media in Caras Severin county, southwestern Romania, where the plant is located, quoted by Profit.ro.

Specifically, Umbrarescu’s family (his son Alexandru) will take over the EUR 12 million claims held by the creditors. Local administration representatives involved in negotiating the deal said that the deadline for the payment of the claims is 30 days – but assured that the payment will be operated within a week.

The company has an annual production capacity of 850,000 tonnes of liquid steel, but production has been stopped since 2013. It produces steel pipes with low, medium, or high carbon content and alloy steel for the subsequent lamination of reinforcing bars made of concrete, wire, and special steels. The latest investor was planning (in 2019) to widen the product range with elements such as profiles for building structures, sections for shipbuilding, or railway sleepers.

Given the state of the plant, the relaunch calendar expressed by the investor looks rather optimistic, but the timing of the takeover seems right in the context of the reconstruction of Ukraine, which will require large amounts of steel profiles and rebar.

The context prompted investors’ interest in Romanian steel assets, although the projects are of relatively small scale. Donalam, the Romanian subsidiary of Italian steelmaker AFV Beltrame, announced last October that it was investing more than EUR 30 million in 2023 in modernizing its two facilities, located in Calarasi and Targoviste (this facility taken over in 2022). More recently, this January, a local producer of welded mesh (Intertranscom Impex) took over for EUR 7.5 million in a public auction the assets of wire factory Dan Steel Group Beclean. 

With a history of over 200 years (the first forge was built by Frantz Martinschnitz in 1796), the steel mill Otelu Rosu followed after the fall of communism a path highly illustrative for Romania’s industry: sold (privatized) to Italian investors in 1999 for just USD 0.5 million (given the plant’s debts), it entered insolvency in 2003, and ownership has changed repeatedly while its assets were partly sold or simply deteriorate.

Laminorul Danube Metallurgical Enterprise (LDME), controlled by Sunningwell International Polska (and Omnisteel of Moldova since November 2022), is the last investor who attempted to revitalize the plant in 2019. However, the COVID-19 crisis, among others, prevented the recovery, and Otelu Rosu entered insolvency again in May 2023.

iulian@romania-insider.com

(Photo source: Timakov/Dreamstime.com)