Optima Group, the leading oil company in Bosnia’s Serb-dominated entity of Republika Srpska, has started selling its assets in an apparent attempt to deal with growing indebtedness, raising fears that the Russian investor is preparing to bail out.
One employee told Balkan Insight of a dire situation in the company, which is laying off workers and selling off or renting out its real estate to raise money.
“We are facing a downsizing of the workforce and cannot use our days off, holidays, even sick leave. Sales have dropped substantially and we suffer huge pressure because of this,” the employee told Balkan Insight on Friday.
Earlier this month, Optima Group published a tender for sales of much of its real-estate assets, a total of 19 units, including hotels, motels, houses, factory halls, land, offices, apartments and cafés across Republika Srpska, Serbia and Montenegro.The starting price for the lot has been set at some 5.4 million euro and the tender is open for another month.
The establishment of this company eight years ago was hailed as a business breakthrough for Republika Srpsa after Russia’s NeftegazInKor company – a subsidiary of Zarubezhneft – in 2007 purchased a major part of the failing RS Oil Industry.
The purchase included a share of 75 per cent of Bosanski Brod Refinery 66.75 per cent of Modrica Oil refinery and 70 per cent of Banjaluka Petrol.
Despite Russian investment, Optima Group continued operating at a loss and accrued additional debt. The worst situation is in the Brod refinery, which has accumulated the biggest losses in recent years.
According to an independent audit of the Brod refinery, carried out at the beginning of this year, the company's short-term debt now exceeds its assets by almost 20 million euro and its net debt is three times higher than its capital.
The net loss of Brod refinery at the end of 2014 was 13 million euro, while its accumulated debt exceeded 265 million euro.
“The refinery's capacity to continue functioning depends solely on the continued financial support of the mother company NeftegazInKor, Russia,” the audit by Deloitte, obtained by Balkan Insight, read.
The audit also warned that the refinery has spent significant amounts of money in suspicious transactions and was not paying most of tax and other contributions.
In addition, over a short period at the end of 2014 and beginning of 2015, the refinery took out two loans from Zarubezhneft for almost 23 million euro, most of which went directly to the Republika Srpska budget to cover unpaid taxes.
Opposition leaders and experts have claimed for years that the entity government has used Optima Group, or at least some of its companies, for money laundering. They say it is a channel through which Russia exerts influence on RS leadership.
Dragan Cavic, leader of the opposition People's Democratic Movement, NDP, said in Banjaluka on Thursday that sales of assets of Optima Group were not in line with the privatization contract with the RS government. “It seems the one and only way to solve heavy losses,” he said.
The worsening situation in the Optima Group, and especially in the Brod refinery, has sparked rumors that Russian investor may soon bail out of the unprofitable business, and either sell all of the Optima Group, or most of the loss-producing parts, keeping only those assets needed for the core business.
Sinisa Pepic, a Banjaluka-based economist, told Balkan Insight that sales of Optima Group assets could be a smart move to quickly raise some cash, but could also be a sign of something bigger.
“This might be sign that Optima Group is being prepared for sale, leaving the buyer only the core businesses assets,” Pepic said on Friday.