Page 1


Seaside hotels could be a target for investors keen to buy at a discount, revamp the unit and then wait for the profits to roll in See page 8


Local alcoholic beverage producer Prodal expects a good 2009 despite the economic turbulence and is planning medium-term foreign expansion See page 10


Several festivals and concerts across the country will keep Romania’s culture vultures entertained over the long hot summer See page 13



AUGUST 3 - 9, 2009 / VOLUME 14, NUMBER 29


Franklin Templeton’s Mark Mobius is waiting for the state to officially confirm the company as manager of the EUR 3 billion Property Fund, but the process seems to be stalling LAURENTIU OBAE

See page 4

LaborMed Pharma Group acquires Ozone Laboratories portfolio B USINESS R EPORTER

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Stephen Stead, CEO and chairman of laborMed Pharma group

LaborMed Pharma Group has recently acquired the entire portfolio of products from pharma producer Ozone Laboratories, as well as the Ozone brand, the firm has announced. Through this transaction, the group gains a portfolio of over 400 branded over-the-counter (OTC) and prescription generic pharmaceutical products sold in Romania, Poland, Hungary, Bulgaria and the Czech and Slovak Republics. Last year this portfolio brought a turnover of EUR 44 million.

The deal is a major step forward for LaborMed, bringing it closer to its goal of expanding across the region and positioning itself as a key player in Central and Eastern Europe, according to Stephen Stead, CEO and chairman of LaborMed Pharma Group. According to company data, the transition period is expected to be fully completed by the end of this year. This acquisition of the Ozone product portfolio will bring an OTC component to LaborMed Pharma Group’s business. As a result of this acquisition, the group expects to recruit an additional 75 people. Company information shows that LaborMed Pharma Group will not buy any of the Ozone Laboratories companies, as this is an asset purchase agreement for the product licenses and marketing authorizations. LaborMed Pharma is primarily focused on the local market. In February last year, the investment fund Advent International became its majority shareholder, through a leveraged management buy-in transaction. Dana Ciuraru


Founding Editor BILL AVERY Editor-in-Chief SIMONA FODOR Deputy Editor-in-Chief CORINA S~CEANU Journalists DANA CIURARU OTILIA HARAGA

AUGUST 3 - 9, 2009 / VOLUME 14, NUMBER 29

Executive Director GEORGE MOISE Sales & Events Director OANA MOLODOI Marketing Manager ADINA MILEA Sales Consultant GIUSEPPINA BURLUI Advertising Sales CLAUDIA MUNTEANU Layout BEATRICE GHEORGHIU Production




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MILLENNIUM BANK’S LOSSES WORSEN BY 8 PERCENT é The Romanian subsidiary of Portuguese bank Millennium bcp has announced that its losses increased by 8 percent in the first six months of 2009, to EUR 15.9 million, compared with the same period of 2008. The bank granted 86.2 percent more loans, to EUR 252 million, compared to H1 in 2008. Its operational revenues grew by 141 percent at six months of 2009 to EUR 12.8 million, from EUR 5.3 million in the same period of 2008. Millennium Bank Romania’s operational costs went up by 3.6 percent to EUR 21.2 million, from EUR 20.5 million reported in the same period of 2008. MINIMAX INVESTS EUR 1 MLN IN TWO NEW STORES é Discount chain MiniMax Discount, controlled by Austrian group Real 4 You, plans to open two new units in Avrig and Ramnicu Sarat, with an investment of EUR 1 million. The unit in Avrig, in Sibiu county, delivers 767 sqm, and required an investment of EUR 750,000, excluding the cost of the land. The store in Ramnicu Sarat, Buzau county, will deliver 960 sqm after it is opened at the beginning of August. The company plans to open 15 new units by yearend, assigning around EUR 250,000 to each. 4

Franklin Templeton Investment Management Ltd, the company which won the bid to become administrator for the Property Fund, has established its first priorities for the fund which was created in 2005 to compensate people whose properties were seized under the communist regime. Mark Mobius, the company’s head of emerging markets, who was in Romania last week, said that the fund could be listed on the Bucharest and other foreign stock exchanges, some five or six months after the new administrator takes over. According to him, the fund’s listing on the Bucharest Stock Exchange (BSE) will have an “incredible” outcome as the market is currently undervalued and the BSE could double or triple in value in the next three to four years. “The BSE is one of the most undervalued stock markets in the world. I hope this will change and in the coming years liquidity will hike and there will be more listed companies,” said Mo-


RAIFFEISEN ASSET MANAGEMENT’S FUNDS REACH EUR 100 MLN ASSETS é The funds managed by Raiffeisen Asset Management were among the most traded in H1 of 2009 on the local capital market. The company’s total managed assets have reached EUR 100 million. At six months, the funds had attracted 40 percent of the total net subscriptions on the market. The largest increase was reported by Raiffeisen Monetar, a fund launched in September 2008 which currently manages over RON 350 million. Raiffeisen Asset Management holds a market share of 21 percent, estimated at June 30, making it the second largest such company on the market managed assets wise.

Franklin Templeton says it could list Property Fund on BSE in six months, but management contract still not signed

Franklin Templeton’s Mark Mobius attended the fund’s shareholder meeting

bius. Although Franklin Templeton won the bid for the fund’s management ahead of Morgan Stanley Investment Management, the firm is yet to be appointed administrator. Last week’s general shareholders meeting of the Property Fund should have seen a vote for the

Shareholder QVT seeks dissolution of Flamingo International US investment fund QVT, which holds a stake of 22 percent in Flamingo International, has asked for the company to be dissolved. The fund has requested that the potential move be included on the agenda of the firm’s shareholders’ extraordinary general meeting in August. No reason has been given for the demand, said Flamingo International representatives. Flamingo reps said they had “serious doubts regarding the good intentions of this shareholder,” as QVT is represented on Flamingo International’s administration board. A restructuring and development plan has been under discussion by the Flamingo management for several months, and has already been presented to the administration board. Flamingo representatives say that two weeks ago, QVT increased its participation in Flamingo by another 6 percent, taking it up to 22 percent, after the management plan had already been presented to the board. “QVT is a fund that often does not take into account the interests of the companies in which it invests but rather tries to obtain gains at the expense and to the detriment of the other shareholders,” said Dan Adamescu, owner of a 17.5 percent stake in Flamingo, through his company Nova Trade. The plan to re-launch Flamingo In-

ternational has the support of the other main shareholders. It also requires support from banks and the company is now in advanced discussions to obtain supplementary financing for its future development. The Flamingo shareholders will in August devise a plan to financially re-launch the company, according to Dragos Cinca, founder and shareholder with a 25.1 percent stake. “I am not worried about the vote on QVT’s request since, reasonably speaking, dissolving the company is against the interests of all shareholders, including QVT. It is hard for me to understand why QVT would want to hurt itself. Even if they do not agree with the other shareholders’ plans and end up diluting their stake, they would still gain more than if the firm were dissolved,” said Dragos Simion, president of the company. Flamingo International, the second biggest local retailer of electronic products, home appliances and IT&C, posted sales of approximately EUR 23.8 million in the first quarter of 2009, down 34 percent compared to the same period of the previous year. The company ended Q1 of this year with a negative EBITDA of approximately EUR 3.2 million compared to only EUR 0.14 million during the same period of last year. Otilia Haraga

management contract, but the Finance Ministry, which owns around 66 percent of the fund, was not present. Mobius limited himself to saying, “Now it all depends on the government and they will decide if they go with us or not.” Currently, Franklin Templeton has foreign direct investments of $15 million in Romania, but also indirect investments through stocks owned in foreign companies in the region that are also present on the Romanian market. The company director said that he was especially interested in two types of stocks in Romania: merchandise producers and consumer goods and services. The company says the state’s control over the fund is not a problem, as long as the value of the portfolio can increase. The Property Fund owns participations in 88 companies, most of them in the energy sector. The majority shareholder is the Finance Ministry with a stake which reaches 66 percent of the share capital. Dana Ciuraru

Vodafone’s Q2 revenues go down while Orange’s go up The financial results for the second quarter of 2009 released by mobile operators Orange and Vodafone, the two main players on the telecom market, show a slight increase in the revenues of Orange and a 17.3 percent decrease in those of Vodafone. Both operators posted a growth in their customer base compared to the same period last year. “Our financial results reflect the impact of the economic downturn, to which Vodafone is not immune, combined with the regulatory decisions that took effect in the period,” said Liliana Solomon, chief executive officer of Vodafone Romania. Total average revenue per user (ARPU) was EUR 8.3 in the quarter ended June 30, compared to EUR 8.2 in the previous quarter, ended March 31, a 0.7 increase increase. At the end of Q2, postpaid subscribers made up 38.4 percent and prepaid 61.6 percent of Vodafone Romania’s total customer base, a 9.4 percent increase in the number of postpaid customers, year-on-year. Orange revenues in the first half of 2009 were in excess of half a billion euro. Revenues in the second quarter amounted to EUR 267 million. The ARPU was EUR 108. Otilia Haraga BUSINESS REVIEW / August 3 - 9, 2009


IMF team scrutinizes Romania’s performance before handing over more money

BUSINESS REVIEW / August 3 - 9, 2009


An International Monetary Fund delegation has come to review Romania’s economic progress and decide on the next steps for the second tranche of the loan to bail out the country’s economy, not long after the first tranche was transferred. This is the first IMF review mission under the new stand-by agreement which pledged almost EUR 13 billion for Romania from the fund alone. A delegation headed by Jeffrey Franks will be assessing Romania’s economic performance until August 10, with the report likely to be discussed in the second half of September. The second tranche of the IMF loan, some EUR 1.9 billion, will come after this first review is completed and depending on its results. The delegation has started by meeting Romanian Central Bank representatives and government ministers in order to negotiate fiscal policy and structural reforms for the second half of the year. The govern-

Finance minister Gheorghe Pogea is on the team dealing with the IMF

mental team which will negotiate with the IMF includes finance minister Gheorghe Pogea, the minister of economics Adriean Videanu, transportation minister Radu Berceanu, SMEs minister Constantin Nita, the labor minister Marian Sarbu and vice-prime minister Dan

Nica. The IMF team will also meet local union, business association and banking representatives. European Commission and World Bank representatives will participate in some of the meetings. In March, when the stand-by agreement was negotiated, a series of performance criteria for budget deficit, foreign exchange reserves and inflation was established. Then, Romania’s GDP shrinkage was foreseen at 4.1 percent, but more recent estimations indicate a contraction exceeding 7 percent. The IMF has already given Romania EUR 5 billion which was used, according to state representatives, to cover the Romanian Central Bank’s reserves in order to boost lending. The European Union, which is one of the lenders to Romania in the EUR 20 billion financing program, has recently delivered EUR 1.5 billion of the EUR 5 billion it pledged. Corina Saceanu

BRIEFS INTERAGRO PLANS TO DELIST VIROMET VICTORIA FROM RASDAQ é Interagro Group, owned by businessman Ioan Niculae, with a majority stake in chemical substance producer Viromet Victoria, is planning to delist the company from the Rasdaq platform of the Bucharest Stock Exchange after the minority shareholders sold their stakes in Viromet, according to a company statement. The producer recorded losses of EUR 4.2 million in 2008, after making a profit in 2007. Last year, Viromet registered a turnover of EUR 32.9 million, 16 percent down on 2007. In June, its capitalization was calculated at EUR 4.3 million on Rasdaq capital market.



Central European Media Enterprises acquires local MediaPro Entertainment in Romania, will also take on the division’s $36.5 million debts. The buyer will gain $10 million and 2.2 million shares in CME, with the possibility to further purchase another package of 850,000 shares at the current price of $21.75 per share. “CME intends to integrate its

existing fiction, reality and entertainment television production units with MediaPro Entertainment to create a dedicated content division consisting of production, services and distribution operations across all of CME’s territories,” the company said in a statement. Sarbu, who was previously op-


American group Central European Media Enterprises (CME) has bought local MediaPro Entertainment (MPE) from Romanian businessman Adrian Sarbu, who also becomes CME’s CEO, in a complex deal estimated at $97.6 million by American bank Merrill Lynch. CME, which also owns Media Pro

CinemaPro is one of the companies in MediaPro Entertainment’s portfolio

erational manager of CME, is now president and executive manager of the group, which runs TV stations in seven Central and Eastern European countries, including Romania. CME, which should post its earnings report on Q2, was estimated by analysts to register a 63 percent drop in operating profit and 35 percent fall in revenue. After the first three months of 2009, the group reported a 37 percent revenue fall, warning the ad slowdown would persist into next year due to the global economic downturn. In May, Time Warner completed a $241.5 million investment in the Bermuda-registered CME, acquiring 31 percent stake. Magda Purice

Cocor Bucuresti sees profit fall by 2.2 times in H1 2009 Romanian firm Cocor Bucuresti has reported a 2.2 times lower profit after the first six months of 2009, due to the investments it made in the recent refurbishment of its commercial center in Bucharest. In 2008, the company invested some EUR 27 million in renovating the Cocor store, which will become Cocor Luxury Store. The revamped store is estimated to be completed by November this year. The firm’s market value is EUR 28.5 million, based on the most recent share price on the Rasdaq platform of the Bucharest Stock Exchange. The commercial center building will deliver 25,000 sqm of built area and a GLA of 9,500 sqm, representing a 30 percent extension, and a multimedia frontage worth EUR 4 million. I 6

BUSINESS REVIEW / August 3 - 9, 2009


Local consortium wins second tourism advertising campaign

The Romanian Village museum is one of the main tourist attractions in Bucharest

The recent advertising campaign Tourist in Romania, launched by the tourism ministry, has been assigned to a consortium made up of Best Advertising & Consult SRL and Optimedia SRL, in a deal worth nearly EUR 870,000, according to a

BUSINESS REVIEW / August 3 - 9, 2009

statement by the ministry. The campaign consists of ads which were initially to be broadcast on three television channels, Pro TV, Realitatea TV and Antena 3, chosen on the basis of GFK’s ratings throughout May, the ministry said. Ministry officials said that the bid winner has been selected based on the most cost-effective price, or CPP (cost per point). Best Advertising and Optimedia also run the Romanian tourism ministry’s advertising campaign Romania – Land of Choice, broadcast on CNN. The campaign, which requires a total of EUR 1.3 million in funding, will consist of 550 ads on Eurosport and 475 ads on Europort 2, a sponsorship campaign on Eurosport wand an internet promotion campaign. Another 529 ads will be broadcast on CNN, under a EUR 335,000 contract with Best Advertising & Consult-OptiMedia. I

WHO’S PETR SICHROVSKY, the current country general manager of Xerox in the Czech Republic and Slovakia, has been appointed country general manager of Xerox Romania and the Republic of Moldova. He joined the sales department of Xerox in the Czech Republic in April 1997. Since then, he has held several positions with the company, being appointed country general manager of Xerox Slovakia and the Czech Republic in February 2004. MARIUS PERSINARU, former country manager of Xerox Romania and the Republic of Moldova was promoted to vicepresident of opera-

NEWS tions, developing markets operations (DMO) – East. He was also interim general manager for Xerox Romania and Moldova until Petr Sichrovsky took up the position. DRAGOS DAMIAN, 42, is the new general manager of Actavis Romania, moving from a similar position at Zentiva. He graduated from the Faculty of Medicine in Cluj and has been working in the pharma industry since 1994 when he joined Roche and became medical manager. Between 1999 and 2004 he led the office of Menarini/Berlin Chemie. He was later appointed commercial manager of Terapia. In 2006, after the firm was taken over by Ranbaxy, he was appointed CEO. In April 2008 he became general manager of Zentiva.

Business Review welcomes information for Who’s News from readers. Feel free to contact us on 210 77 34, by fax at 210 77 30 or e-mail:


ANALYSIS By Corina Saceanu


Unita Turism has put its Onix hotel in Cap Aurora up for sale in order to finance investments in other hotels in its portfolio

Wave of new buyers to spruce up seaside hotels The Romanian seaside has plenty of accommodation for the ever decreasing numbers of tourists going there, but many of the existing facilities are in need of a makeover. This calls for investments, either from current owners, who could make the money from selling other hotels, albeit at knockdown prices, or from new owners, with around 10 percent of coastal hotels up for sale, according to estimates. Even more could change hands if the right buyer pays the right price. 8

The recent attempt by the Romanian tourism authorities to re-establish the seaside as a main holiday destination for both locals and foreigners, along with increasing investments in seaside hotels and infrastructure, could be a winning recipe if all parties work together. As far as hotel investment opportunities go, there are plenty to pick from. The Romanian seaside holds a mix of old, lower-star hotels and newer units, either built from scratch after 1989, or revamped. Investment opportunities still lie in the old facilities, some of which are up for sale and could use a makeover, and even in newer ones which are also on the market. Smaller investors that own twostar hotels of up to 30 rooms are more inclined to sell this year, say some. “On this segment, the price of a hotel room reaches around EUR 40,000,” Adrian Niculescu, business development manager of Crystal KBC Group, tells Business Review. From what he has seen, around 10 percent of seaside hotels are for sale, either officially or unofficially. “Many owners don’t plan to sell but would do, should an interested buyer offer a reasonable price,” says Niculescu. KBC is now intermediating the sale of Riviera hotel in Mamaia, a 230-roomed turn-key hotel on the market for EUR 15 million.

OWNERS SHELL OUT ON UPGRADES, HOPE SALES WILL TIDE THEM OVER Owners of seaside hotels include THR Marea Neagra, a company owned by SIF Transilvania, the biggest hotel owner on the seaside. The firm has an accommodation capacity of 11,000 units in 35 hotels and villas, as well as restaurants and bars, on the Romanian coast. The total accommodation stock is around 60,000 units. THR Marea Neagra has recently upgraded the Bran-Brad-Bega complex from two stars to four, but many of the hotels in its portfolio are one-, two- and three-star properties. The European Drinks group, owned by businessmen Viorel and Ioan Micula, also holds a handful of old hotels on the Romanian seashore, some of which it acquired in 2002. Unita Turism, another Romanian hotel owner, owns 1,345 hotel rooms in holiday resorts Mamaia, Olimp, Tulcea and Cap Aurora, which bring around 35 percent of the company’s hotel revenues. Unita Turism is one of the com-

panies investing in upgrading some of its hotels while selling other assets to cover the investments. While revamping Panoramic hotel in Olimp, which should be ready in 2010, Unita Turism put Onic and Safir hotels in Cap Aurora, which in total contain 342 two-star rooms, up for sale a year ago. The firm says it is now in negotiations with potential buyers. “There is interest but at prices which don’t reflect the value of the assets,” Tiberiu Dima, commercial manager at Unita Turism, tells Business Review. The starting price for the two units is EUR 6 million.



Occupancy rates in the hotel industry are not at their highest this season, but a hotel investment started now would begin to generate money next year at the earliest. Tiberiu Dima expects seaside hotels to see an average occupancy rate of 60 percent this year, a drop on the 75 percent last year. While there are plenty of possible purchase targets, buyers could be found among those who hold liquidities, even at times like this. “Some of the investors are looking for distressed assets which they could buy at a 50 percent discount, while others are looking for cash flow businesses, office buildings with leasing contracts or hotels already known on the market and with the potential to be affiliated to international chains,” says Adrian Niculescu. Potential buyers may come from the Russian Federation, the Anglo-Saxon area or even from the United Arab Emirates. Coastal purchase opportunities are not limited to completed hotels. Land is now at attractive prices, says Niculescu, especially plots right by the beach or water. Plots of land which could host hotels of up to 50 rooms should be popular because smaller hotels could also bring their owners profits outside the summer season through conferences. The short duration of the summer holiday season is one of the major setbacks for the Romanian seaside, says pundits. But even so, during this year’s season peak, there are fewer tourists filling existing hotels and as an effect some hotel owners have slightly reduced their tariffs. All this will be mirrored in their revenues at the end of the summer, although the decline may not be equally spread across all categories of hotels on the Romanian coast. BUSINESS REVIEW / August 3 - 9, 2009



Driving forward: road construction and repair is one of the areas best suited to PPPs

Roads, tourist facilities and airports most likely to pique PPP interest When Romania joined the European Union in 2007, post-accession funds were meant to increase economic competitiveness by improving transport infrastructure, and strengthen regional development in general. But Romania is still lagging behind many European countries on infrastructure projects, one of the most appealing segments for public-private partnerships. By Magda Purice

Private-public partnerships (PPPs) have great potential for the coming years, according to representatives of law firm Tuca, Zbarcea & Asociatii. Infrastructure is one of the most appealing segments for such partnerships – and many BUSINESS REVIEW / August 3 - 9, 2009

planned infrastructure projects are in still various stages, such as that of feasibility study, public procurement procedure pending and negotiation of the contractual conditions. Meanwhile, several national motorway sections are already under construction, while others are expected to emerge from the pipeline in the near future, provid-

ing plenty of work for local consultancies. For instance, Tuca, Zbarcea & Asociatii representatives told BR that they were providing assistance to the Romanian Ministry of Transport and Infrastructure and the National Company of Motorways and National Roads for the concession contract for some sections of the planned A3 motorway. Elsewhere in the business world, many projects in the energy sector also suit public-private partnerships, while another area which requires PPP-type legal advice is the concession of public services, such as parking, water and sewage, the public health system and public transportation. In the coming period, pundits expect a growth in this area, given the increasing number of projects announced in the infrastructure and energy sectors, projects which, in spite of the delay caused by the financial crisis, will be resumed in the near future due to banking and capital market reinforcement. But there is a legal fly in the ointment. Although the main features of PPP may be found in various types of contracts regulated by the applicable legal provisions, the absence of any specific regulation of the concept may pose difficulties during the implementation of such projects, according to Tuca, Zbarcea & Asociatii. Nonetheless, PPPs are on the way. In the road infrastructure segment, a consortium of constructors comprising Dragados, Sedesa Obras y Servicios and Diversia Concvesiones y Servicios has applied to design and build seven sections of national roads, as part of the strategy for the repair of national roads launched by the Romanian National Company of Motorways and National Roads. Meanwhile, in the energy sector, CEZ took part in a bid to partner the Romanian-state owned Nuclearelectrica for the construction of units 3 and 4 of the Cernavoda nuclear power plant. The project company, a joint venture between Nuclearelectrica and private investors, will develop, construct and operate the two units.




Air transportation services may attract significant public-private partnerships. Canada’s IntelCan, an

international airport developer and operator, is building the EUR 200 million Brasov airport through such a contract. Earlier this year, the National Federation of Balneal Tourism Patrons (FNPTB) announced that firms in the sector were planning to form public-private partnerships in order to attract EU structural funds, with PPPs the most suitable form of pursuing them. “These partnerships are fast to make and the initiative must come from the investors. It is just a matter of will,” said Nicu Radulescu, president of the FNPTB. Sometimes, the impossibility of accessing EU money is due to the lack of financing, which in turn stems from poor regulations. For instance, the Buzias resort needed about EUR 7 million for modernization works, while the entire western region has been granted only EUR 3 million from European financing, according to Radulescu.

REAL ESTATE GETS ON THE BANDWAGON In 2008, the Romanian government approved an Emergency Ordinance for the signing of a PPP between the Romanian Ministry of Development, Public Works and Housing and Hungarian developer Trigranit for the EUR 1 billion Esplanada project in Bucharest. Works on the project were scheduled to start in 2007, but paperwork delays pushed the deadline back to the second half of 2009. So far, though, no news has been released on the scheme. If ever completed, the project is set to be built on 10.7 hectares located in downtown Bucharest and, by completion time, will deliver 800,000 sqm of offices, residences, retail, cultural buildings and green space. The local authorities will get a EUR 40 million building in the project and 12,000 sqm of office space, under the PPP agreement. The project will become state-owned after the 49 years stipulated in the contract. Another PPP in Bucharest is the Casa Radio project. With a similar investment sum, it began in 2007, after several years of negotiations and issues triggered by interchanging investors. The project, to be called Dambovita Center, is being developed by Plaza Centers, part of Israeli group Elbit Medical Imaging, in partnership with the Romanian state. 9

INTERVIEW By Corina Saceanu


Local firm Prodal keeps its spirits up with foreign expansion in mind Romanian alcoholic beverage producer and distributor Prodal expects 2009 to be a year to toast, with the firm having started regional expansion and planning to spread from Bulgaria to other countries in the region, and on the medium term even to Western Europe and China. FLORIN RADULESCU, general manager of Prodal Group, talks to BR about the company’s sales and plans. 10

How did sales of alcoholic beverages evolve for Prodal in the first half of the year, and what do you expect from the second half? Sales went as predicted in the first half; we have a 37 percent market share for Stalinskaya and 47 percent for Wembley Dry Gin. Our recent investment in the import and distribution division for other premium alcoholic beverages will consolidate our position on the domestic and foreign markets. The global economic situation is difficult, but we have been on the market for 15 years and we have seen periods of growth as well as tougher times. We have a business strategy that aims for durable growth, and the current stage of the Romanian and global economy doesn’t scare us – on the contrary, for businesses that have had a healthy growth in the past, crisis periods can offer more rapid development opportunities than normal market conditions. What sales channels are active for Prodal at the moment? We are using all sales channels, the big chains of international key accounts (IKA), HoReCa and traditional trade. The most active at this moment are IKA and traditional trade, with HoReCa being partially affected by the current economic situation. But eventually most of the volumes affected in HoReCa are recovered from the other sales channels, at least for our main brands. What changes in consumption trends for alcoholic beverages have you seen in the first half of the year? We have seen a change in where the products are consumed: people are drinking alcohol at home more than in bars and restaurants due to the higher costs of the latter, plus the expenses of the side consumption. Apart from expanding Prodal, what other investments will you start during this period, either through the group or as an individual investor? Our investment and expansion strategy does not pause, because we are aiming for the leader’s position.

At present we are investing in improving the production process with automated equipment, while continuing to develop the distribution network in Bulgaria, where we expanded in 2008. In its 15 years of activity, what have been the best and the worst times for Prodal? What was your strategy to survive the bad periods? The worst period was before Romania’s EU accession, when we felt the effects of the repeated increases in excises to EU level and the health tax from the Romanian market. These pushed up the price of spirits, which affected the entire industry. But we have had more good than bad moments: our start, then the launch of Wembley, which was a success with the product reaching the leader’s position in eight months. 2008 was also a good year, when we consolidated our team. There is a high chance that these good periods will keep coming. This year is also a very good one. As far as the bad periods go, we have kept investing in our brands without cutting budgets, just by being more efficient with our expenses. How much of Prodal’s sales come from modern trade channels? The weight of modern trade has increased in the last couple of years due to the expansion of hypermarkets and supermarkets across the country. Now 25 percent of our sales come from this segment. How much of the group’s revenues are generated by its activity on foreign markets? We have started export activity in the last year, when we launched distribution in Bulgaria. We predict exports to bring 5 percent of the group’s turnover by year-end. To what extent do you expect to continue expansion on foreign markets, and what countries do you target? Our business plans target countries in the region: Bulgaria, Hungary, the Republic of Moldova and Serbia. But we are seriously considering more distant countries on the medium term, such as Germany, France, and, last but not least, China. BUSINESS REVIEW / August 3 - 9, 2009



AUGUST 3 - 9, 2009 / VOLUME 14, NUMBER 29


Manage your business environment !

Romanian real estate market ‘not a catastrophe’, says John Taylor’s local managing partner


Bogdan Voica, managing partner of John Taylor, a French real estate brokerage company which has recently entered the market

The local office of French real estate broker John Taylor, which is active mostly on the local luxury real estate market, expects things to improve significantly from the second half of 2009, according to managing partner Bogdan Voica. “The company is in talks over several projects this year and with others that are already ongoing we are assured of a favorable second half of 2009,” Voica told BR. “For the next year, we foresee an improvement on the market. The situation on the real estate market applies to everyone on this segment, whether they are developers, consultants, brokers or investors. The volumes and structure of the real estate deals signed this year show investors’ mistrust of the Romanian economy,” he added. The businessman believes that the sit-

uation on the luxury segment is slightly different, as both sellers and buyers are capable of dealing with projects that can be delivered to a higher speed and quality. In the second half of 2009, the company expects changes in terms of business on this segment. It targets properties that cost a minimum of EUR 3,000 per sqm or with a special location or architecture. Currently, the firm owns properties in the upmarket Bucharest areas of Kiseleff, Primaverii, Herastrau and the historical center and in secondary cities such as Poiana Brasov. In May, John Taylor oversaw its first corporate deal as a broker for Commerzbank Romania, which relocated its office from Unirii Square to the Central Business District. According to Voica, the transaction will open the broker’s way to

its targeted segment of premium clients. The French real estate brokerage company was established in Cannes in 1864, and currently has 16 offices in Milan, Barcelona, Paris and Saint Tropez, among others. In October 2008, John Taylor established a local office in Bucharest, targeting the luxury segment on the office and residential market. The broker’s local office has as a master franchisor Prestige Domus, a company whose associates include Prestige Real Estate, the franchisor for John Taylor in Barcelona, and Domus Real Estate, the franchisor for the firm in Milan. The associates have a similar capital contribution to the office in Bucharest, with an initial investment of EUR 100,000. Magda Purice


AFI Palace Cotroceni gets three new tenants


New Yorker, LC Waikiki and X-Side have secured space in the mall due for a September opening

AFI Europe’s mall in Bucharest, AFI Palace Cotroceni, has signed three new leasing contracts with New Yorker, Waikiki and X-Side brands, totaling over 2,000 sqm of rented area. With the new contracts, the rented area in the shopping mall exceeds 90 percent of total leasable space. New Yorker has rented 815 sqm, LC Waikiki 850 sqm and X-Side 450 sqm. The new names will join the other fashion brands already present at AFI Palace Cotroceni, such as Zara, Zara Home, Zara Man, Stradivarius, Massimo Dutti, Bershka, Pull & Bear, Oysho, C&A, Mango, Marks & Spencer, Calvin Klein and Orsay.

AFI Palace Cotroceni will open in September, delivering 76,000 sqm in 250 commercial spaces, as well as a multiplex cinema with 20 halls, a Real hypermarket and 2,500 parking spaces. Last October, the developer’s general manager in Romania, Reuven Havar, announced that the mall had leased 90 percent of its entire rentable area and had ceased to offer more spots. “Although the mall has rented 90 percent of its area, we are no longer offering further spaces. As a developer, if you want good profits, you must not rush the rental process,” said Havar at the time. Magda Purice

Real estate deals to resume in second half of 2009 and next year, DLA Piper predicts Real estate transactions that have been put on hold or significantly delayed because of the financial crisis will be resumed or completed in the second half of this year and next year, according to DLA Piper law firm. “This could be a consequence of the restructuring of the portfolios held by developers, undertaken at an international upper level, as well as the alternative financing mechanisms that have been made available to real estate players,” Alin Buftea, senior associate with DLA Piper in Romania and head of its property and construction department, told BR. The slowdown of the real estate market has led to the equity element of investments increasing compared with previous years, when financing was easily acquired and the criteria used by the banks when granting loans were quite flexible and fluid, Buftea added. “The real estate players are more reluctant and cautious even before taking decisions that were considered standard in the past. The values of the projects are 12

definitely lower than in previous years,” he noted. The firm, which has five lawyers working on real estate related projects, is currently involved in the sale and purchase of a portfolio of real estate developments. “It is a cross border transaction coordinated by our office, on which we are working closely with our colleagues from different jurisdictions. There are also other challenging transactions in the pipeline where the parties have begun preliminary non-binding negotiations,” the DLA Piper representative said. In terms of customer approach, Buftea says clients are not as aggressive as they were during the golden days of the Romanian real estate market. “They are tending to keep a low profile rather than spending money on advertising which will not now add any value to their investments. However, we have noticed that the activities related to major real estate projects that are not blocked are being advertised as usual,” he concluded. Corina Saceanu BUSINESS REVIEW / August 3 - 9, 2009



One of the most popular summer festivals, Anonimul film festival, takes place in the Danube Delta

Romania gets ready to revel If your holiday itinerary is flexible or just happens to pass through cities such as Sibiu or Brasov, or even the Danube Delta, you may just have to make room for some more entertainment that originally planned. There are several interesting film, music and arts festivals in August that require your attention and participation. By Otilia Haraga

One of the best known events on Romania’s summer festival calendar is Anonimul International Independent Film Festival, which will take place between August 10 and 16 in Sfantu Gheorghe in the BUSINESS REVIEW / August 3 - 9, 2009

Danube Delta. Around 5,000 spectators are expected to show up for this eclectic festival. To get there, you will most likely have to take a boat, making it a slightly more unconventional and exclusive venue than you might find at the average film festival. The festival will keep its com-

petitive structure, which includes feature-length movies, fictional short films and animation shorts. It will also retain its Eco program in which it presents recent productions about the global problems that humankind faces today. The production that will open the Anonimul International Independent Film Festival is Los Abrazos Rotos/Broken Embraces by Spanish director Pedro Almodovar, a picture that was in the official competition at the Cannes Film Festival earlier this year. The festival will keep the parallel program that it started last year, called Actors Behind the Camera, in which it showcases movies directed by well-known thespians such as Helen Hunt, Sarah Polley, Kenneth Branagh, Bob Hoskins, Jude Law, Ewan McGregor and Andrew Lauer. The following week it is the turn of Transylvania Calling 2009, a biennial festival of electronic music and contemporary arts that will take place between August 18 and 25 in the mountains of Transylvania, close to Gura Raului in Sibiu county. This year 135 artists from 65 countries will be invited to play in front of a crowd of approximately 3,000. The gates will be opened on the 18th at 11.11 exactly. However, the festival will only begin the next day with an opening ceremony with shows and music from all over the world. The festival promotes Sibiu as a tourist destination, and also encourages environmentally-friendly attitudes by recycling electronic equipment, and providing organic and vegetarian food. In addition to this, organizers say, “It promotes Romania in a hitherto unknown light.” The first two days of the festival will include conferences, workshops, games, movies and social interaction. All in all, there will be four days and four night of music: world, downbeat, upbeat, dub, ambient and experimental. Earlier in the month, the focus is on Bran Castle, also known as Dracula’s Castle, near Brasov. Between August 7 and 9 the castle will host Bran Castle Fest, a 72-hour event with theater, movies, music and laser projections on the castle’s walls. In the spirit of the venue’s spooky associations, the event will take place in the only weekend with a full moon in August. The festival is organized to promote the castle as

a tourist destination. The concerts and shows will take place on two stages: one of them in the yard of the castle and the other on the plateau at the back. Movies will be screened in a special tent. The festival will gather theater troops and music bands from Romania, England and France. In total, over 80 artists are expected to perform during the festival: DJs, actors, painters, and creators of video projections. The music set will include chill out, techno and medieval music. The event is organized by the Company for the Administration of Bran Castle and by EuroUrban. Last but not least, you will not have to travel far to attend the first festival dedicated to diversity in contemporary arts. The Sirnaville Arts & Crafts Festival will be taking place 40 km from Bucharest, near the runway of the Aerofox Aerodrome in Sirna, Prahova county, between August 14 and 16. Organizers are expecting between 2,000 and 3,000 people to show up at the venue. Emilia Topolica, project manager, says the festival is designed as an exchange of creative experiences, a place out of time where people can come and experience creativity. “People will have the opportunity to create their own paintings, sculptures and drawings; they will be able to create different objects and accessories – and everything will be handmade!” she says. The most important guest of the festival is the European champion of acrobatic air-shows, Zoltan Veres, who will perform on August 15. “We planned this first edition to gather some of the best music our local scene has to offer, although not all artists are mainstream acts. For future editions we are considering inviting international guests, but we’d be selecting them on the same criteria,” says Topolica. The biggest live acts at the first edition of Sirnaville are local names such as URMA, Suie Paparude, Kumm and Blazzaj – headliners for the alternative/indie music stage supported by OneDay. On the bass music stage, which will host drum & bass, break-beat, trip-hop sets, Dudu and MC Tine, MC Beand and others have been invited to entertain the Sirnaville citizens. 13



Public Enemies


the police department dedicated to pursuing him and wanders around in a silly disguise). Whatever the reason, it does leave the film lacking a certain psychological depth. Another thing it lacks is much edge-of-the-seat drama, which is odd considering that bank robbers’ activities are inherently dramatic. Although anyone familiar with the facts already knows the fates of the characters, with a few exceptions the various shoot-outs, car chases and heists do not generate the tension that Mann conjures so expertly in Collateral, Heat and The Insider. At times, events feel a little flat. Overall, though, Public Enemies is a deft, classy movie, always watchable, despite its few flaws. It is great on period detail, convincingly conveying the atmosphere of the 1930s, with all its jazz, smoky dives, corruption, Tommy guns and fedoras. Visually, it is a pleasure to watch, and not just because of its leading men. Depp is a charismatic, charming Dillinger, whose ruthlessness only occasionally breaks through his pleasant façade. Bale’s Purvis is machine-like in his pursuit of justice, with his humanity briefly emerging when he carries Dillinger’s gal (Marion Cotillard) out of a brutal interrogation. Though she gets little screen time, Cotillard humanizes Billie Frechette, making her more than the average gangster’s moll. The supporting cast – though the robbers, like the cops, are largely indistinguishable – is also good. That Public Enemies has come out during the worst recession since the time in which it is set is a fortunate coincidence. Aside from the color of the Dillinger story, top performances from two striking leads and high production values, who can resist a chance to see banks and bankers getting their comeuppance? Debbie Stowe Director: Michael Mann Starring: Johnny Depp, Christian Bale, Marion Cotillard On at: Cityplex, Hollywood Multiplex, Movieplex, Starplex, The Light

Comic fans and those who wish to relive their childhoods can now find a large collection at the Jumatatea Plina bookstore, which opened last week in Cafe Lente (31 General Praporgescu St.). The bookstore includes a selection of 150 titles from the best known independent comic publishing houses in France, Canada, Belgium, Switzerland and Romania. Most are prize-winning titles which have received accolades such as the Prix Goscinny, Fauve d’or and Eisner Award. Among the selection will be comics by authors such as Persepolis by Marjane Satrapi, Laurent Maffre, Edmond Baudoin and Ludovic Debeurme, Chris Ware, Alan Moore & Dave Gibbons, Adrian Tomine, Iulian Fratila, Brynjar Bandlien and Matei Branea.

Geocaching comes to Romania


Everybody loves a bank robber. Not a real one, obviously – they tend to be violent thugs. But a fictional one, one who chivalrously gives his coat to a female hostage, woos his girlfriend with charming gestures and pointedly avoids depriving a humble working man of his pitiful savings during a raid. The fact that he looks like Johnny Depp doesn’t hurt either. Depp plays notorious Depression-era bank robber John Dillinger, the main point of focus of Michael Mann’s lavish cat-and-mouse crime film. The cat to Depp’s mouse is Melvin Purvis (Christian Bale), the fast-rising federal agent tasked with hunting down Dillinger and his cohorts by J. Edgar Hoover. The movie covers events from an audacious jailbreak in 1933 to the end of Dillinger’s life, the timing of which I will not specify in order to avoid spoiling the suspense for any readers unaware of his story. The gangster’s various heists, his brushes with the law, spells inside, gang dynamics and love life all feature. Meanwhile, the story also follows Purvis’s own endeavours to catch his prey, making the film part Dillinger biopic, part police procedural. It’s a lot to fit in, which is reflected in the running time of almost two hours and twenty minutes. What the movie doesn’t offer is any insight into the mind of either man. Recent intelligent gangster movies have dwelt on what drove the criminal – the Denzel Washington character’s determination to escape the poverty of his hardscrabble childhood in American Gangster, for example. But here, Dillinger’s motivation is left entirely unaddressed. Purvis is even more of an enigma, minus even the standard neglected wife and child that Hollywood usually shoehorns in to illustrate the cop’s devotion to his job. Perhaps this is because Mann did not want to attribute spurious traits to real people, which would be reasonable (although the director takes other liberties with authenticity, including changing the robber’s last words to something ridiculously romantic and a surely apocryphal scene where Dillinger saunters into

Tuborg Green Fest music festival will take place between September 4 and 6 in Izvor Park in Bucharest. The festival is organized by EMag!c Entertainment and access to the public will be free of charge. In total, 15 Romanian and international rock bands and artists will perform. Two big foreign names have already been confirmed: German rock band GUANO APES and electro-dance act Chicane.

The event is taking place in historic Sighisoara

Transilvania GeoQuest Sighisoara 2009, the first international Geocaching event in Romania, will take place from August 7 to 9 in Sighisoara. Throughout the three days, participants will have the task of unraveling mysteries, looking for clues, searching through the Timisoara fortress and roaming the hills to find treasures that have been well hidden by the organizers. The game began in the United States in 2000, when access to the 24 satellites around the Earth ceased to be restricted. From that moment, anyone anywhere could find the coordinates of the location

he or she was in. The idea is very simple: you hide a box, write down the GPS coordinates of the location and post them on the internet. The searchers take the coordinates from the internet, look for the box and if they find it, take something from the box and leave a replacement object inside. The idea of the game has remained the same. It was named ‘geocaching’ and has a dedicated site Currently, in the US there are hundreds of thousands of hidden boxes, in Germany over 60,000, in England 30,000 and in France 6,000. In Romania there are 400 boxes, the first of which was hidden somewhere near Bran Castle. The technical equipment for the project is being supplied by Kaspersky Romania. “We have gotten involved enthusiastically in this project because it is the kind of game that starts with an idea and the search you do on the computer, and which you continue in the real world, discovering a taste for adventure and exploration,” says Andreea Cimpoesu, marketing manager at Kaspersky Lab Romania. Otilia Haraga BUSINESS REVIEW / August 3 - 9, 2009

Business Review Issue 29, August 3-9 2009  

Slow off the mark - Franklin Templeton’s Mark Mobius is waiting for the state to officially confirm the company as manager of the EUR 3 bill...

Business Review Issue 29, August 3-9 2009  

Slow off the mark - Franklin Templeton’s Mark Mobius is waiting for the state to officially confirm the company as manager of the EUR 3 bill...