Mahindra's bid for Tractorul suspended

Plan grounded over writing off Romanian firm's debts.

Mahindra & Mahindra's (M&M) bid for the Romanian tractor manufacturer Tractorul Brasov has been suspended owing to a disagreement between M&M and the Romanian privatisation authority, (AVAS), in writing off Tractorul's debts worth ¤ 180 million.

However, the country's largest tractor maker said it was open to any further proposals put forth by Avas. Arun Nanda, member of the Mahindra & Mahindra management, is expected to reach Bucharest during June 10-15 for further negotiations. Romanian government owns 80 per cent in Tractorul.

As part of the bid, M&M had requested the state to write off Tractorul's accumulated liability of around ¤ 180 million. The write-off was a part of the bid condition.

The negotiation process has been suspended because of the uncertainty of resolving this issue of state aid. "M&M's main concern was it did not have sufficient guarantees that the state aid would be unconditionally approved by the Competition Council and would not be subsequently challenged by the European Commission," M&M said in a press release.

An AVAS press release said, "After the alarming statements made by Romanian political leaders and the union's representatives, M&M is doubtful of successful closing of the transaction''.

There were also pressures in connection to the cutting off of the water supply, electricity or marsh gas by the utilities companies, which would have led to the interruption of the company's activity. The investor (M&M) firmly refused the idea of taking over a non-operational company."