Following a two week mission, the International Monetary Fund (IMF) reached agreements with the government of Romania on a wide range of strict governmental and fiscal reforms.
Part of that package is an agreement that the state privatization agency (State Assets Resolution Authority) will privatize or close down the three largest money-losing companies remaining under its jurisdiction. Those are electrical equipment maker Electroputere Craiova, tractor plant Tractorul Brasov, and bearing manufacturer S.C. Rulmentul SA Brasov (RBR).
Under the agreement, the three must either be privatized or closed down by the end of 2005. Rulmentul Brasov was on the IMF's agreed privatization list in 2004, but was not privatized. While the Minister of State recently noted there had been interest in Electroputere and Tractorul, he made no reference to any active outside interest in Rulmentul Brasov.
The most recent interest in RBR was from Ortadogu Rulman Sanayi (ORS, Turkey). However, ORS walked away from its USD $3.9 million offer after its due diligence found RBR sitting on massive stocks of what it termed worthless inventory, supporting an impossibly large workforce, unpaid bills and wages, and after RBR's workforce repeatedly walked out in protest over Ortadogu's interest in the company. INA (Germany) was also encouraged to acquire Rulmentul Brasov rather than build a new plant nearby, but declined.
Founded in 1949, Rulmentul SA Brasov is Romania's largest bearing manufacturing facility. Under the RBR and URB (Uzina Rulmentul Brasov) brands, the company manufactures ball bearings, linear bearings, tapered roller bearings and needle roller bearings.
Brand names are difficult to distinguish, however. RBR as a brand is actually registered by Rulmentul Barlad, the bearing factory in Barlad. URB, although it began as the brand for Rulmentul Brasov, eventually became a common brand name available for use by all of Romania's government-run bearing factories.
A portion of Rulmentul Brasov's stock began public trading in 1994, and the company was nominally privatized in 2000. It is publicly traded (BSE symbol: RBR), but 51% owned by the state. Its continued existence has been guaranteed only by massive government debt write-offs, subsidies and captive sales to other state-run customers.
Actual financial and operating information is difficult to obtain for RBR. As examples, the Romanian government has claimed employment was 5,200 at the same time RBR reported it stood at 6,600. Similarly, the government reported RBR returned unspecified "massive" profits on bearing sales of over USD $13 billion, while RBR itself reported the government wrote off loans to it as uncollectible, then claimed profitability on sales of USD $4 million, but only by ignoring its debt.
For many years, RBR had an ongoing technical relationship with Koyo-Seiko Co. Ltd. (Japan), which included a late-1990s rework of some of its manufacturing systems. Approximately USD $12.5 million of bearing production machinery was acquired from Koyo in 2000.
Although RBR has been through some restructuring -- including massive employment reductions to around 3,000 today -- its continuing problems were enough to bring the unwanted IMF attention.
Rulmentul Brasov is also facing competition from other former state-run bearing plants in Romania now operating as divisions of some of the world's largest bearing companies. Koyo Seiko owns the former Rulmentul Alexandria plant in Alexandria, and Timken owns the former S.C. Rulmenti Grei plant in Ploiesti. Both are updated and have received extensive investment in plant and equipment. And INA is still building out a massive
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