Apparently, cognacs and carpets are not attractive to investors. Earlier this year, the state put up for auction several companies of strategic importance for Moldova. Privatization of the companies, in which the state holds equity shares, are held each year. The privatizations announced this year have been classified as a way to "search for the billion" because the state set the objective to obtain more money for critical situations, bringing to auction more assets that are important for the state.

Currently, the web page of the Public Property Agency displayed information that two joint stock companies are subject to privatization: the Company For Carpet Production Floare Carpet SA and Barza Alba SA. The companies have already been put up for auction several years in a row, but no one is in hurry to privatize them.

Currently, the list of assets not subject to privatization includes 161 goods.

State Offer in 2016   

This year, from 19 February to 8 April 2016, the state auctioned several state enterprises and joint stock companies, in which it holds significant shares: S. Tutun - CTC, UNIC SA, Aeroport Catering SA, Company For Carpet Production SA, Barza Alba SA, Amelioratorul SA, etc. Experts believe that, in some cases, the largest stake of privatization account not for the companies themselves, but for the land, they hold.

After this wave of privatizations, according to the Ministry of Economy, the equity stake of the UNIC store (the state share is 85.45%) was sold at the price of 252 million lei. The state received over 5 million lei from Airport Catering SA (100%) and in the case of Amelioratorul SA (99.385%) - over 982 thousand lei. Thus, from this year’s offer the state received about 260 million lei (over 11 million euros). The joint stock companies Floare Carpet and Barza Alba did not catch any investor’s fancy. Thus, currently, they are included on the list of assets subject to privatization on the web page of the Public Property Agency.

At the parliamentary meeting of 23 June, PPEM deputy Iurie Leanca requested the Government to submit information (a report) on de-nationalization of public property, and it could be presented on July this year. 

Shares of Floare Carpet SA are steadily falling 

Floare Carpet SA was founded in 1978 and it was converted into a joint stock company in 1993. The company specializes in the manufacture of carpets and rugs, being the largest carpet manufacturer in the country and controlling, according to some estimates, about 13% of the market of carpets and carpet articles in the country.   

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The state is the majority shareholder in Floare Carpet, holding 59.48% of the share capital of the company. FinComBank, usually associated with the name of Vladimir Voronin’s wife, controls another 16.81%.    

Floare carpet.png The state has been trying to sell its stake of 59.486% in the company Floare Carpet since 2008, but it remains unclaimed until now.   

According to the information released by the Public Property Agency (PPA), the share capital of the company is 60,862,090 lei; the surface area is 47321.8 sq. m. and the area of the adjacent territory is of 9792 sq. m.

The company provides about 563 jobs. The average salary of an employee of Floare Carpet in 2015 was 3879 lei, while the director’s salary was 400 thousand lei.

Although compared to other state-owned companies, Floare Carpet is considered a successful company, in the last 5 years, the company's shares are offered for sale at a progressively lower price. It seems that the state is trying to reduce to the maximum its value, so that in the end, someone could buy the company at a price of nothing:   

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Dinamica valorii acțiunilor SA Floare-Carpet

Economists claim that the cheapening of the value of state-owned companies shares are not random and someone took fancy of these state properties.

If the shares cost dynamics of Floare Carpet is continuously decreasing, the profits in recent years increased only in 2013, it was about 8 times greater than that of 2012 and in the following two years, it was decreasing.    

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Profit vs Datorii ale SA Floare-Carpet

In 2015, Floare Carpet ranked 130 in the list of major contributors to the state budget, 12 positions above the Airport Catering, which was privatized.

According to a newspaper article, published by Timpul in 2010, in the election campaign of 2009, Floare Carpet sponsored the Communist Party, giving out carpets worth over 100 thousand lei in the villages of Moldova. These electoral donations were explained by the fact that the majority shares of Floare Carpet belonged to the state, President of the Council was under the Ministry of Economy (led at the time by the Communists) and the other 17% of the shares belonged to Fincombank, Oleg Voronin, son of the communist leader, was one of its leaders.

In 2011-2014, Floare Carpet had seven contracts with the state (SCM, GIP, Parliament Secretariat, the Court of Auditors, etc.) worth 819 195 lei.    

No hurry to privatize the largest producer of cognac   

Barza Alba plant was founded in June 1944. In 2000, it was converted into a joint stock company, being one of the largest producers of cognac in Moldova. Barza Alba SA is located in Balti and its share capital is twice as big as that of the Floare Carpet - 136.712000 lei, the state share in this company is 100%.

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Similarly to Floare Carpet, Barza Alba was repeatedly auctioned, but no one rushed to privatize the plant. Some experts argue that the attractiveness of the company decreased because of the embargo imposed by the Russian Federation, which does not accept alcoholic drinks from Moldova.

According to the official page of the company, today, it is one of the "biggest alcohol producers in the region, working with the best distributors, and its sales market extends from Australia to the US, including countries like Russia, the territory of CIS, Germany, Czech Republic, China and the Baltic countries.” However, the state decided to bring it out privatization, but so far, there are no investors.   

In 2013, being dissatisfied with the wave of privatizations, especially with the companies proposed for privatization, the opposition, represented by SPRM proposed a bill that would prohibit the privatization of state assets of strategic importance, including Barza Alba SA. They proposed then to remove from the list of assets subject to privatization such companies as Moldtelecom, Tutun CTC, Barza Alba or Aroma, and other institutions "which in 22 years of independence withstood in situations that were even more difficult " and bring millions of lei to the state budget. The project of the opposition was not supported and today Barza Alba is in the category of assets subject to privatization on the web page of PPA.

Unlike Floare Carpet, Barza Alba had only two contracts with the state: in 2011 worth 13903 lei and in 2015 worth 44179 lei, both with the Parliament Secretariat.

Although its share capital is twice bigger than that of Floare Carpet, in 2015, Barza Alba ranked 369 in the list of major contributors to the state budget.

Company’s profits in 2012-2014 were fluctuating, like debts, which however unlike Floare Carpet SA, decreased.   

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According to the political analyst Victor Ciobanu, facilities are privatized for sums much lower than the real price,  as the government made all the possible to bring these companies into a terrible financial condition, which is a pretext of bringing to market a company or another. According to Ciobanu, the scheme  has already become a classic one, presenting the case of BEM, when the state conceded  the control package for a symbolic fee.

The situation of the two companies is interesting given that they are well- known and specialize in strategic areas for the country's economy. The only reason why investors do not hurry seems to be the fact that they expect the value of the shares of these two companies to decrease even more. 

Investigation, Floare-Carpet SA, Barza Alba SA
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