Romania’s Chimcomplex Largest Investment Plan in the Last 30 Years

The beginning of 2022 came with a first important and encouraging news from the largest player on the domestic market for chemical products, Chimcomplex Borzesti, which launched the first issuance of international bonds and plans a capital increase by EUR 225mln, after being listed on the main market of the Bucharest Stock Exchange. Moreover, the 2022-2030 Strategic Plan of Chimcomplex provides for a total of EUR 2.5bn in investments and represents the largest investment package in the chemical industry in the last 30 years.

“Chimcomplex has the intention to put Romania on the green map of the world due to the projects it envisages. The company has an exponential growth potential because we have four aces up our sleeve: we value natural resources, we have know-how, we have a market and now we also have money,” said Stefan Vuza, President of Chimcomplex Borzesti.

Only several days before announcing the intention to list on the main market of BSE, an event marked on January 17 through a press conference, the company’s shares rose by 9% in a single day, their attractiveness after this announcement being obvious.

Chimcomplex President also said on this occasion that the two capital actions mentioned were intended to begin the strategic investments of relaunching the chemical products lines in conservation. Both chemical platforms use only 20% of their capacities. “We are also considering the construction of new product lines, which Romania is currently importing at exaggerated prices. Our plan is divided into three stages. The first package consists of bond issuance of EUR 350mln (the largest international bond issuance in Romania so far), followed by those on the capital market, of EUR 225mln. These two financing actions, together with EBITDA in the following three years, will ensure the financial resources necessary for the first investment group, i.e., the vertical one, which is worth RON 3.6bn or EUR 725mln. We plan to make these record investments in the following 1,000 days. The second investment group will be announced according to capital market regulations. We estimate that the CRC Group will exceed the first billion euros as value of the production of goods in only three years and that the turnover will reach EUR 10 billion vertically alone, by the end of the decade.”

 

Presence on the capital market since 1996; increase in shares by 1450% over the last 12 months!

Chimcomplex Borzesti, company present on the Romanian capital market since November 1996, debuted on January 17 on the Regulated Market of the Stock Exchange under the stock exchange symbol CRC, as a result of the transfer from the AeRO market. At the moment of transfer, Chimcomplex Borzesti was the largest company listed on AeRO market, with a market capitalization of almost RON 8 billion (EUR 1.6 billion). “We are honoured by presence on the Stock Exchange of an issuer of Chimcomplex Borzesti’s caliber, which today continues its path on the capital market as company listed on the main segment. Chimcomplex is an example of transformation and adaptation to the market economy, and we are looking with interest to the company’s prospects for the future. Presence on the Regulated Market opens up new horizons, and free-float increase can determine a higher interest of local and international investors and it can also allow the inclusion of Chimcomplex shares in FTSE Russell indices, which will lead to the consolidation of the Stock Exchange’s emerging market status,” said Adrian Tanase, CEO of the Bucharest Stock Exchange.

“With a history of 25 years at the Bucharest Stock Exchange and constantly evolving in a challenging business, Chimcomplex now makes a natural upgrade, promoting on the Main Market, and we are honoured to be together in this approach of a flagship company for both the chemical industry of Romania and for the domestic capital market. We are convinced that through the step taken Chimcomplex will be both on the radar of important investors and that of retail investors, and we hope that the results will confirm the trust given, bringing added value to stakeholders,” added Lucian Isac, CEO of Estinvest.

Following the transfer on the main market of the Bucharest Stock Exchange, the company controlled by businessman Stefan Vuza, through the investment vehicle CRC Alchemy Holding, which owns an 85.35% stake, could also attract large investors, such as pension funds, which are not allowed by law to invest in companies on the AeRO market. The last trading day of Chimcomplex Borzesti shares on AeRo market under CHOB symbol was January 12, as two days letter the last transactions with such shares were settled, starting trading on January 17 on the regulated market, under a new symbol, CRC. It is extremely interesting that, in the last 12 months, Chimcomplex shares recorded a 1,450% increase!

 

Products delivered in 54 countries on five continents

In the last six months, the company delivered essential products for 54 countries on five continents, for approximately 600 clients.

“Trading on the Regulated Market and ringing the stock market bell are landmarks for Chimcomplex. However, we remain focused on the day-to-day tasks. Investments of over EUR 245mln carried out by Chimcomplex in recent years have created the prerequisites for an efficient and sustainable development. Projects worth over EUR 55mln are in the final execution phase and projects of over EUR 125mln are in preparation and execution start,” said Victor Avram, CEO of Chimcomplex Borzesti.

In turn, Adrian Dumitriu, Chief Financial Officer, mentioned: “This increase represents a late recognition of company’s performance, which in 2018 purchased Oltchim assets. These assets were valued by the famous expert Winterhill from the UK at EUR 1.1 billion. The market noticed this transaction, but forgot to react for more than two years, until April last year. Chimcomplex has historically inherited a very small share capital, of only EUR 60 million. Compared to it, the company’s accounting net assets are over 30 times larger, and this is easy to notice. An installation among the over 35 existing, held by both plants together, has an estimated value of EUR 40-65mln. As a result, the exponential growth was unavoidable and in 2022 it still does not reflect the accounting reality. At the end of three quarters, in September 2021, the company already registered an EBITDA of over EUR 140 million. And now if we consider the indicators in our industry (chemical specialty), the company’s value is equal to x15.5 times EBITDA and applying this ratio to EUR 140 million we get a result of over EUR 2.1 bn Enterprise Value. But today, in terms of market capitalization, we have only EUR 1.7 billion!

 

Record production in 2021

In terms of production, Chimcomplex produces and sells 110 KTO of polyols per year, and 2021 marked a historical record production. Other 14 reactors are in conservation, installations which will allow, after the investments are completed, a production of 200 KTO/year. The Energy Division of the CRC Group is also in full swing.

“We have announced investors that we started the construction of a high-efficiency cogeneration power plant, of 50 Mwe, in Rm. Valcea. It will be completed in 2022. Also, this week, we expect the approval of the documentation for what will be the first trigeneration power plant in Romania, of 7 Mwe. We will become a growing producer of energy. We consider the energy independence of our chemical operations, but also energy supply to investment partners, in the three industrial parks of 52 ha each, which we are arranging. In conclusion, we are confident that we will continue the good evolutions so far and we will confirm our growth potential, favoured by competitive advantages, the opportunities brought by the decarbonization process, the green chemistry, hydrogen, and energy,” Adrian Dumitru also mentioned.

 

Strategic landmarks for the future, with a focus on renewable energy

According to Dumitru Coman, Chief Technical Officer, the investment package of over EUR 725 million will generate:

• An increase in the polyols production capacity to 200,000 t/year (9% of the European polyols production);
• State-of-the-art ion exchange membrane electrolysis at Rm. Valcea and Onesti (three facilities x 122.500t/year NaOH);
• Cogeneration plants with high efficiency gas turbines made in three stages 49 + 33 + 85 MW ee > NB The 49 MW Cogeneration Project of which 33 MW will be put into operation in 2022 is the largest high-efficiency cogeneration plant (> 90%) commissioned in Romania;
• Brine desulphurization plants in Onesti and Rm. Valcea (85.000t/year of salt);
• Modernization of the Oxo Alcohol plant by increasing the consumption of green hydrogen and CO2 captured for use in chemistry;
• Installations of sodium silicates 45,000 t/year and derivatives (magnesium silicate and colloidal silica);
• The new plasticizer plant based on the manufacture of DOTP 20,000 t/year that will integrate products resulting from the chemical recycling of PET plastic waste;
• Modernization of the logistics infrastructure to reduce the related costs (chemical warehouses, cars, ramps etc.).

In addition to this investment package, up to EUR 725 million, Chimcomplex intends to promote the relaunch of the manufacture of VCM/PVC, photovoltaic panels for renewable energy, chemical recycling of PET and PUR polyurethanes, green methanol by Syngas.

 

Wide range of products

Chimcomplex ensures a varied range of products with applicability in a multitude of essential markets.

POLYOLS: Petol products are a family of polyether polyols used for the synthesis of polyurethane products which include adhesives, coatings, sealants, elastomers, flexible and moulded polyurethane foams, rigid polyurethane foams.

ORGANIC: Octanol, Isobutanol, Normal Butanol (N-btanol) and Propylene Oxide. They have a wide applicability, from the manufacture of plasticizers to the production of antifreeze, industrial varnishes and much more.

BIOCIDES: It is the only producer in Romania of biocidal active substances based on chlorine, sodium hypochlorite, lime chloride.

CHLORALKALI: Caustic soda solution, caustic soda flakes, liquid chlorine, and hydrochloric acid.

INORGANIC CHLORIDES: Ferric chloride, calcium chloride, lime chloride. Each of these solutions has a wide applicability.

ALKYLAMINES: Monomethylamine, Dimethylamine, Trimethylamine, Isopropylamine.

 

Shares in CET Govora

At the end of 2021, Chimcomplex won a package of assets at the tender organized by CET Govora S.A., in compulsory settlement proceedings, at the price of EUR 8,222,948, the package consisting of the 110 kV connection substation, equipment and installations for demineralized and softened water production, natural gas connection to network, coal depot as well as buildings and land.

“For a sustainable development, Chimcomplex needs balance between operational efficiency and energy efficiency, in the current context, in which we witness major changes in the energy market. The desire to reach this balance was one of the main arguments that led to this acquisition. It is a strategic investment, with a good potential for both the company and the local community in Rm. Valcea,” said Victor Avram, Director of Operations at Chimcomplex.

In the short and medium term, from an operational point of view, the management efforts will focus on modernizing the current plants, as well as on building new high-efficiency cogeneration capacities, based on natural gas.

“The capacities considered must cover the electricity and heat consumption on the industrial platform and, we hope, in collaboration with local authorities, the thermal energy needs for the city. These investments will solve several important aspects: they will ensure energy security, will allow sustainable development and allow us to stay competitive in the market, while reducing the carbon footprint of the region,” continued Victor Avram.

The priority investments of the company in the energy field will focus in the following years on improving performance. To this end, the company plans to implement complex solutions, including high-efficiency gas turbines, photovoltaic parks and energy production through hydrogen, the requirement in the European directives of reducing the impact of carbon dioxide emissions.

“From the desire not to get actively involved in solving the problems of the local community, we have also identified a modern solution, based on heat engines, which can be a reliable and reasonable option in terms of cost, which the city needs for heating. But it is a laborious project, which can only be achieved in partnership with local authorities,” concluded Victor Avram.

 

Strategic company for Romania

Chimcomplex is the main producer and supplier of vital chemicals in the region, being a strategic company for the Romanian economy, established in 1954 in Borzesti, near Onesti. Chimcomplex currently manages the largest chemical plant, with two industrial platforms in Onesti and Ramnicu Valcea.

In 2020, Chimcomplex posted a turnover of RON 1.2 billion and in the first nine months of 2021 it reported a turnover of RON 1.7 billion. Chimcomplex Borzesti is owned by CRC Alchemy Holding, with an 85% stake, and the Romanian state, through the Authority for State Assets Administration, with an 8.9% stake. The rest of the share capital, of approximately 5%, is owned by legal and natural persons.