Business Review, Issue 20

REAL ESTATEGraham Kilbane, the new GM of developer Omi-los Group, is focusing on leasing space in EraShopping Park projects

See page 13

BUSINESS REVIEWROMANIA’S PREMIERE BUSINESS WEEKLY JUNE 1 - 7, 2009 / VOLUME 14, NUMBER 20

www.business-review.ro

ANALYSISPlori Capital and Consulting plans to invest in of-fices after selling its shares on the local stock mar-ket, says investment director Gerasimos Vergotis

See page 12

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Cable operators expect a grim year, with landline services andre-transmission of TV content both down, prompting price cuts.The internet segment will still be dynamic, but an optimisticforecast suggests overall market stagnation

See pages 10-11

Cable operators expect a grim year, with landline services andre-transmission of TV content both down, prompting price cuts.The internet segment will still be dynamic, but an optimisticforecast suggests overall market stagnation

See pages 10-11

ANALYSISThe Centre Ville aparthotel complex hopes tokeep its occupancy rate above 90 percent thisyear, says general manager Yaron Ashkenazi

See page 9

HUNG UPHUNG UP

FRANKLIN TEMPLETON AND MORGAN STANLEY SHORTLISTED FOR PROPERTY FUND MANAGEMENT; SEE PAGE 6

BUSINESS REVIEW / June 1 -7, 2009 3

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BUSINESS REVIEW / June 1 -7, 20094

Consumer goods producer anddistributor Procter & Gamble Roma-nia reported a consolidated turnoverof EUR 532.53 million for the fiscalyear 2008, down 3.8 percent fromEUR 553.2 million in 2007. Afterthree years of turnover growth, P&G’slocal operations posted a similar valuein 2008 to 2006. While three of thefirm’s divisions – Procter & Gamblemarketing Romania, Procter & Gam-ble distribution and SC Detergenti –registered positive net profit in 2008,the company’s materials managementdivision suffered a loss of just underEUR 900,000 in the interval, accord-ing to the company’s financial report.

After making a greenfield invest-ment of USD 50 million in 2008 in a250,000-sqm plant in Urlati, Prahovacounty, the company announced at thebeginning of 2009 it would com-mence production in spring of 2010.The USD 50 million investment in thefirst development stage of the beauty-care production line could see 50 per-cent of production go onto the Ro-manian market and the rest through-

out the Balkan region. Following thefull completion of investments, theplant will produce more for externalmarkets, according to P&G.

Two years after entering the Ro-manian FMCG market in 1992, theAmerican company acquired a pow-der plant in Timisoara for which it es-timated direct investments of USD 35million. More than half of the produc-tion in Timisoara is exported to eightcountries in the Balkans. In the future,P&G plans to expand its production atthe Timisoara-based plant as well as atits distribution center in the same city.Total investments estimated by thecompany exceeded USD 600 millionin the last two years. The money wenton training programs and educationalprojects while USD 300 million of thetotal was spent on advertising andmass media.

P&G currently operates on sever-al markets, including detergents (withAriel and Tide) and personal careproducts (with brands such as Pan-tene, Head & Shoulders and Gillette).

Magda Purice

P&G Romania sees turnover fall 3.74 percentin 2008, gambles on Urlati plant

Most top executives worldwide sayrenewable energy projects remain eco-nomically viable despite collapsing fos-sil fuel and commodity prices and thecredit crunch, but the view on the USand European markets is different. PéterKiss, KPMG`s global power & utilitiessector leader, says while the EU has seta 20 percent target for the share of re-newables in final energy consumptionby 2020, the current financial crisis hasslowed the progress of such projects.

Of the 200 senior energy executivesfrom across the globe surveyed for KP-MG’s annual report into M&Ain renew-able energy, 42 percent identified the USas the country where they were lookingto invest, while 24 percent named India.Although some large energy companiesin Europe feel stymied not just by fi-nance but also by planning and access tothe grid, the US is starting to look moreattractive to foreign investors with a sta-ble government stimulus creating thepotential for a more profitable deal envi-ronment, according to the survey.

Of the Romanian energy market,Kiss said that the banks are looking for

commercially bullet-proof projects andrenewable investments which are stillmuch more expensive than conventionalpower generation technologies andtherefore can only be viable with signif-icant state support (investment and/oroperating subsidies), so they are at a dis-advantage. “Taking into account the po-tential of renewable resources, size ofthe electricity market, gap to meetingEU targets and the attractiveness of sup-port schemes, some the most attractivetargets for wind, biomass and/or hy-dropower generation and geothermal in-vestments may be in Romania, Poland,the Czech Republic, Croatia, Hungary,Slovenia, and Bulgaria,” said Kiss.

Razvan Mihai, partner at KPMGRomania, thinks the local energy markethas potential for investors, particularlyfor renewable sources. “Many installa-tions are 35-40 years old, and need to bereplaced, not only to bring them up todate with modern technology but also sothat Romania complies with its interna-tional obligations related to protection ofthe environment, ” he said.

Magda Purice

Banks seek commercially bullet-proof CEEprojects in energy, KPMG consultants say

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Kingdom Constructii has recentlybeen appointed as the distributor for thesteel frame system technology FastBuild forBucharest, Romania. With its strong engi-neered and durable product is renownedamong developers as a trusted system forthe construction of lightweight steel framedhomes and its the way of the future for Ro-mania. It is considered the market leadingproduct in Australia and now Kingdom Con-structii will continue in expanding the prod-uct into Romania’s housing industry.

Kingdom Constructii is focused on de-signing the best steel framed homes and increating the most affordable constructionmethod for residential developers. FastBuild has invested heavily in its manu-facturing facilities and information technolo-

gy to create and improve its products here inRomania. FastBuild uses customized soft-ware for the ongoing development of itsproducts and machinery.

Kingdom with its FastBuild system willcommence shortly on a new project calledOakland Homes in the new subdivision inTunari for Southern Cross. The project con-sist of 95 affordable homes and by using thenew Kingdom-FastBuild technology, thedeveloper Southern Cross are able to selltheir 100m2, P+1 homes with car space,front and rear gardens starting from99,990.00euros. Southern Cross a leader increating affordable homes will also use thebuilding technology on all their other proj-ects in the Tunari area creating the most af-fordable area to own a home for Romani-ans.

The design of FastBuild’s machineryand associated tooling has progressed overthe years and is now capable of producing aworld leading high precision product. Onsite, it only takes a few days to erect a typi-cal structure 100m2 home with just a fewpeople making the Kingdom- FastBuildsystem one of the most labour effective sys-tems available.

The typical Kingdom- FastBuild homeis so fast, low cost to build and being a steelproduct makes the FastBuild home easily in-sured by insurance companies and fundedby banks. More details contact tel: 021 313 90 36 , www.kingdom.ro

AD

VERTORIA

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“The Most Innovative Residential Building Concept to Come Along In Over Half a Century” FastBuild-steel framed homes

ALL THE WAY FROM AUSTRALIA TO ROMANIAKINGDOM-FASTBUILD TECHNOLOGY

“THE WAY OF THE FUTURE FOR ROMANIA“

John Saroudis

What is the current status ofworks at nuclear units three and fourat Cernavoda?

EnergoNuclear, the company han-dling the project, is starting the pre-project phase, which might take oneand a half years. The main objective ofthis phase is to establish the exact cost,schedule, licensing requirements of theRomanian and European authoritiesand also to finalize the technical andeconomical analysis to see whether theproject will be competitive. The currentestimated cost is EUR 4 billion, whichcould be recovered in about 15 years,depending on the financing sources.

Has AECL signed a contract withthe project company?

We do not have a contract yet, noteven for the pre-project work. But weare the obvious participant to assist En-ergoNuclear with the studies that willlead to this very important decision. Weexpect to hear from them sometimenext month. AECL will be the contrac-tor for the nuclear units 3 and 4 CAN-DU technology. If the pre-project con-clusion is positive, the actual workswill start some time towards the end ofnext year.

Have you discussed a nuclear unitat a new site with the Romanian au-thorities?

The only discussion we have hadwith the authorities is regarding thenew reactor designs AECL has devel-oped and will build in Canada and Aus-tria. This new technology should notcost more, because one of the objec-tives of making a new, safe design is tokeep it economically competitive. Nu-clear power plants are being built be-cause the cost of electricity is cheaper.The new technology is the advancedCANDU reactor (ACR 1000) which isbigger than the one used at Cernavoda.

Dana Ciuraru

3Q

regional vice-presidentAtomic Energy of CanadaLimited (AECL)

The Romanian economy willcontract by 6.4 percent this year, withan estimated drop in GDP of 2.5 per-cent in 2010, according to an analysisby Merrill Lynch. Previously, the fi-nancial management and advisoryfirm had forecast a drop of 3.4 per-cent in GDP for this year and 3.2 per-cent for the next. The correction cameafter a revision of the fundamentaleconomic trends, as well as after thefiscal adjustments following theagreement between Romania and theInternational Monetary Fund (IMF).

“The sharp contraction in 2009and 2010 will be caused on one handby a normalization of economictrends, after the record 7.1 percentgrowth last year, which was fueled byexceptional factors, and on the other,by the fiscal measures stemmingfrom the IMF agreement,” found theBank of America-Merrill Lynch re-port on Central and Eastern Europeemerging economies. The IMF hasanticipated an economic contractionof 4.1 percent for this year, with stag-nation foreseen for 2010.

Corina Saceanu

Merrill Lynch downgradesRomanian economic forecast to6.4 percent contraction this year

The elections for the European Par-liament on June 7 are quickly approach-ing – though enthusiasm among the pub-lic is muted. The political parties in Ro-mania have picked their candidates, butthere are fears that the turnout will below, especially as the presidential elec-tions due to take place much later, whenthe mandate of President Traian Basescuexpires (he was sworn in as president onDecember 20, 2004) seem to spark moreinterest. Turnout at the previous Euro-pean elections was also low, 29.12 per-cent.

According to an INSOMAR pollthis month, the Democrat-Liberal Party(PD-L) and the Social Democrat Party(PSD)-Conservative Party (PC) alliancewill each get 30 percent of the vote. Nextwill come the Hungarian Minority Party(UDMR) with more than 7 percent,Greater Romania Party (PRM) with 6percent and independent candidate Ele-na Basescu with 4 percent.

Several of the candidates are well-known figures on the political stage. ThePD-L list includes Theodor Stolojan, aformer prime minister and current MEP;Monica Macovei, a former justice min-ister; Traian Ungureanu, a journalist and

columnist; Dan Preda, a counselor to thepresident of Romania; and Valentin Bo-du, a former lawyer and current MEP.The PSD candidates include AdrianSeverin, a former foreign minister andcurrent MEP; Ion Mircea Pascu, formerdefense minister and current MEP; Da-ciana-Octavia Sarbu, a lawyer, party ac-tivist and current MEP; Corina Cretu, aformer journalist and MP and currentMEP; and Victor Bostinaru, a formeruniversity professor and current MEP.

The PNL line-up features NoricaNicolai, an MP and Senate vice-presi-dent; and Renate Weber, a lawyer andcurrent MEP. Among the UDMR candi-

dates are Laszlo Tokes, a priest and cur-rent independent MEP; Iuliu Winkler, anengineer, economist and current MEP;and Csaba Sogor, a priest and currentMEP. Finally, the PRM line-up featuresan odd couple: nationalist leader Cor-neliu Vadim Tudor and George Becali,businessman and owner of Steaua foot-ball club, whose recent detention domi-nated the headlines in the mass media.

The best-known of the new faces isMonica Macovei, who is number two onthe PDL list. A former justice ministerbetween 2004 and 2007, Macovei ishighly respected in Brussels for her ef-forts to combat corruption. At the otherpole is Elena Basescu, a fashion modeland the daughter of President TraianBasescu, who is running as an independ-ent. She is considered an “eccentric can-didate” by the French and German presswhile the Austrian media dubbed her“the Barbie candidate.”

The elections for the European Par-liament take place at the same timeacross all 27 member states of the Euro-pean Union and, after the MEPs are se-lected, Romania will have 33 people inthe European Parliament.

Otilia Haraga

Elections for EU Parliament expected to draw small crowds

The elections are expected to see a low turnout

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The race to manage the PropertyFund is nearing an end with two US in-vestment management firms on the finallist after submitting technical offers, inthe third phase of the selection process.Franklin Templeton and Morgan Stanleywill now submit financial offers, and awinner should be chosen this month,said Enache Jiru, head of the selectioncommission. Several other firms failedto pass the first and second phases. Avi-va Investors, ING Investment Manage-ment and BlackRock Investment made itto the second phase, while Finag Hold-ing, an Erste company, Julius Baer and

the Credit Suisse-OTP consortium wereeliminated after the first.

The two US firms are now fightingfor the administration of the fund, astake of EUR 3 billion of assets underadministration. Franklin Templetonmanages $500 billion of assets in mutu-al funds and other investment alterna-tives, with its stock traded on the NewYork Stock Exchange and included inthe Standard & Poor's 500 Index. Thefirm is bidding for the Romanian projectthrough its London-headquartered divi-sion. The firm does not yet have an of-fice on the local market. Its emergingmarket division is headed by financialguru Mark Mobius.

Morgan Stanley had until recentlybeen present in Romania through its 50percent share package in HTI ValoriMobiliare brokerage firm, which iteventually resold to its initial owners.The firm owns 2.7 percent of the sharesin the BSE. In 2007, Morgan Stanleyhad more than $570 billion of assets un-der management.

The winner will manage the fund'sassets and see to its planned BSE listing.

Corina Saceanu

Franklin Templeton and Morgan Stanley makethe shortlist for Property Fund management

Morgan Stanley owns 2.7 percent of BSE shares

Romanian CEOs have said theyhave a long-term commitment to thelocal economy, despite the difficultyear brought on by the global econom-ic crisis, but have also underlined theneed for more transparency and activeinvolvement from the government, ac-cording to the Romanian CEO surveyreleased by Deloitte Romania.

“The general perception of theCEOs Deloitte interviewed is that thelocal economic downturn, althoughcaused by global events, is actually anecessary correction that had to takeplace,” said Antonis Ioannides, trans-action services partner with DeloitteFinancial Advisory. “Many businesseshave been run inefficiently for manyyears and now they have the chance tooptimize operations. 2009 will defi-nitely not be a growth year, but CEOsare confident in the long-termprospects of their businesses and thelocal market overall,” he added.

The government’s role within theeconomy was among the main chal-lenges identified by the survey respon-dents, with CEOs expecting muchmore involvement, long-term planning

and real action. Infrastructure works,from this perspective, could be a goodstart, according to Deloitte. Suchworks – from transport infrastructureto public administration, urban devel-opment, waste management, educa-tion, health, sport and leisure – havebecome golden opportunities for Ro-mania in such challenging times, ac-cording to the firm.

The private sector will witness ahealthy and active wave of consolida-tion, with most respondents looking atthe second half of 2009 and beyond.“The M&A market is still on hold,mostly because it needs to first under-go a natural selection and eliminatethe weakest players, and also becausethere is still a significant imbalancebetween sellers’ and buyers’ price ex-pectations,” said Ioannides.

Deloitte Romania reported a EUR36.26 million turnover for the 2008calendar year, up some 32 percentagainst 2007. Audit services brought40 percent of the revenues, while therest came from professional consultan-cy services.

Staff

Romanian CEOs call for government involvementand real action, Deloitte study reveals

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Local law firm Lina & Guiaforesees an increase in revenues of10 to 15 percent this year from EUR1 million last year, when its main ar-eas of growth were real estate, ener-gy and natural resources as well asmergers and acquisitions. “Judgingby the first quarter of this year –which is, even in times of economicboom, a difficult quarter – we ex-pect a 10 to 15 percent increase inrevenues,” Adrian Iordache, part-ner at Lina & Guia, tells BusinessReview. He expects increased de-mand in corporate matters andM&A, regulatory, compliance anddisputes, with a strengthening of thefirm’s focus on industries such astelecom and energy.

As for real estate, Iordache saysthat even the speculative real estateacquisition market could becomemore dynamic, “provided that themarket becomes liquid, even at dis-astrous initial prices.” The most ob-vious growth areas this year will bedispute resolution, as well as assis-tance with regulatory and compli-ance issues. Employment law is alsoan area of growing interest. “It ispossible that we could see a general

increase in the M&A market, aswell as in public procurement. Ofthe industry areas gaining ground,energy and natural resources arelikely to become notable,” Iordacheforesees. In dispute resolution, Ior-dache has seen demand from realestate players for assistance withsettlement of disputes relating toconstruction contracts and commer-cial leasing, as well a demand fortransactional assistance for newconstruction contracts, where all parties are now more cautious innegotiating conditions and guaran-tees.

The law firm Lina & Guia,which has four partners and 11lawyers, has seen the economicdownturn in Romania generatingpressure on fees for legal services,due to the cash flow problems of themarket. It is not so much a directpressure on billing rates but more afocus on cost control and pre-dictability, along with a concernwith payment terms. Mihai andCristian Guia, Cristian Lina andAdrian Iordache are partners in thefirm, which was set up in 2007.

Corina Saceanu

Law firm Lina & Guia aims for 15 percent higher revenues

Romgaz, the state-owned gasproducer, is ready to exploit BlackSea resources without Sterling Re-sources. The statement was maderecently by the state secretary in theMinistry of Economy, Tudor Ser-ban. According to him, the legal sit-uation regarding the agreement withSterling must be clarified.

“Romgaz is ready to enter andexploit the continental plateau in theBlack Sea alone. The situation withSterling must be settled. An inspec-tion is ongoing and there will be areport,” said Serban. Representa-tives of Sterling Resources said re-cently they agreed to associate withthe gas producer Romgaz, but onlyif the gas producer were interested.

“For the future, if Romgaz is in-terested we are happy to discuss apartnership, as they are the secondbiggest gas producer in Romania,”said Stephen Birrell, vice-chairmanat Sterling, who added that all theallegations made by the Romanianauthorities were false.

Sterling Resources was accusedof having failed to prove that it hadthe necessary technical and finan-cial capacities to function. Birrellsaid that Sterling could not havestarted oil operations without thesecapacities, which were checked bythe National Agency for MineralResources (ANRM).

Dana Ciuraru

Romgaz is ready to exploit the Black Sea re-sources alone, says the Ministry of Economy

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Romgaz-Sterling collaboration stillup in the air


C A L E N D A R / W H O ’ S N E W S

WHO’SEVENTS, BUSINESS AND POLITICAL AGENDA NEWSIULIAN TECU, 44, is the new country

manager of A&DPharma’s Elantisdivision. He hasover 14 years ofexperience in thepharma market,

having worked for companiessuch as Schering Plough CentralEast AG and Bio Medical Group.He graduated from the Faculty ofMedicine and Pharmacy inBucharest in 1988 and holds amaster’s degree in Communica-tions and Public Relations fromthe National School of Politicaland Administrative Studies.

CARMEN STERIAN has joined theOgilvy Interac-tive team as clientservice director.She has 15 yearsof experience inmarketing and

advertising in Romanian andmultinational companies whereshe has developed ATL, BTL, PRand new media projects.

CRISTINA DIMA has been appointedaccount managerfor the implemen-tation of onlineprojects forOgilvyInterac-tive. She graduat-

ed in 2005 from the Sociologyand Social Assistance Facultyand obtained a master’s in Strate-gic Marketing at the Academy ofEconomic Studies in Bucharest.She has previously worked forMcCann Erickson and Mer-cury360 Communications.

ANDREIA BUNEA has joined Ogilvy-Interactive as copywriter. She is agraduate of the Psychology Fac-ulty. She has worked for variousadvertising agencies such as Mc-Cann Erickson and Idea Zone.

IONUT JUGANARU has joined Ogilvy-Interactive as art director. He isstudent at the University of Art inBucharest. He has worked forvarious advertising agenciessuch as McCann Erickson andIdea Zone.

HRISTO NIKOLAEV PENCHEV was appointed chiefengineer of theJW Marriott hotel.He comes fromAtyrau, Kaza-khstan, where he

was part of the team whichopened two Marriott properties –Renaissance Atyrau Hotel andMarriott Executive apartments.Prior to that, he was with Pan Ser-vice and with the Panasonic deal-er in Bulgaria.

MIRKO PEZZERA was appointed chefat the CucinaRestaurant at JWMarriott. Pezzerahas expertise inhotels in the US,Italy, Ireland,

Thailand, the Caribbean, Singa-pore and Costa Crociere CruiseLines. He holds a diploma fromthe Scuola Professionale Al-berghiero Clusone and has alsograduated from a wine tastingcourse at Luigi Veronelli’sschool.

JUNE 1é 09.00 – The ExP Group organizes the Treasury Risk Workshop – For-

eign Exchange Risk and Hedging seminar in Bucharest. Registration re-

quired.é 16.30 – Baby Acorns celebrates three years of existence at its headquar-

ters.

JUNE 2é 09.00 – The ExP Group organizes the Treasury Risk Workshop – Inter-

est Rate Risk and Hedging in Bucharest. Registration required.é 10.00 – IRIS SA, Apple Authorised Distributor in Romania, organizes

an event on the distribution of Apple products at Hotel Radisson SAS,

Merope I room.

JUNE 3é 19.30 – Centre Ville opens Le Bistro restaurant in Victoriei Square.

JUNE 4é 11.00 – L’Oreal celebrates 100 years at Hotel Residence Cerisiers,

Domenii room. é 14.00 – The humanitarian campaign Overland for a Smile returns for

the fourth time in Romania under the high patronage of the Italian Em-

bassy in Bucharest and the National Union of Italian Entrepreneurs in

Romania.

Business Review welcomes information for Who’s News from readers.Feel free to contact us on 206 0680 (10 lines), by fax at 335 3474 or e-mail: [email protected]

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URTESY O

F CM

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Unirea Medical Center acquired 50 percent of Avamedica last year

The US Embassy in Bucharestwill move into a new building locat-ed near Tunari forest in 2011, ac-cording to the institution’s officials.The new site will be built on five hectares of land rented for 99 years from Baneasa Invest-ments, controlled by GabrielPopoviciu.

The construction works will lasttwo years and will be carried out byAmerican International Contrac-tors-Special Projects companywhich signed the contract in 2008.

The construction companiesBog'art and Apolodor are also in-volved in the project.

Staff

US Embassy in Bucharest rents land fromBaneasa Investments for new HQ

Unirea Medical Center (CMU)has opened two new diagnosis andtreatments centers in Constanta andPloiesti following an investment ofEUR 3 million, the company hassaid. Its plans include the openingof two new clinics in Cluj andBucharest. The new center in Con-stanta was opened in partnershipwith the Constanta-based Avamed-ica and the greenfield developmentrequired an investment of EUR 1.5

million, according to the company’sreleased data.

Last year, the firm acquired 50percent of Avamedica. CMU ownsfour clinics in Constanta so far. Theclinic in Ploiesti, worth EUR 1.3million, is the second clinic openedby CMU in the city. So far, CMUowns 10 clinics and hospitals inBucharest and seven clinics in otherRomanian cities.

Staff

Unirea Medical Center puts EUR 3 millioninto two centers in Constanta and Ploiesti


A N A L Y S I S

Despite a reduction in traveling and accommodation budgets,

aparthotels seem to be doing better than hotels in terms of occupancy

and profitability, but they too have to come up with innovative ways to

thrive. Yaron Ashkenazi, general manager of the Centre Ville aparthotel

complex, talks to Business Review about the hotel's mid-crisis results.

Centre Ville fights to keep over90 percent occupancy whileindustry average declines

By Corina Saceanu

Yaron Ashkenazi is one of thevery few hotel managers who canreport higher than average occupan-cy rates, even for this year, than anyother in the hospitality industry.Last year he saw an occupancy rateof 92 percent at Centre Ville andwants to keep it at a similar levelthis year, compared to an averagemarket occupancy of around 60 per-cent.

How does the unit Ashkenaziruns manage to achieve such highoccupancy rates? The first and sim-plest answer is that Centre Ville isan aparthotel, which rents apart-ments to foreigners doing businessin Romania for the long term, and

demand is steadier on this segmentdespite the downturn.

“We have long-term contracts;we have clients here who havestayed with us for more than fiveyears. In every developing countrythe aparthotel is a winning product.If a guest stays more than 15 days ina month in Bucharest, they find itbetter to take an apartment in anaparthotel,” Ashkenazi, generalmanager of Centre Ville hospitalitycomplex, tells Business Review. “Ifthe crisis hadn’t started, we wouldhave finished this year with a 97percent occupancy rate. We starteach month with 80 percent occu-pancy, and the marketing team isworking to fill the gap. I hope to fin-ish the year at 91 percent.”

One of the aparthotel’s biggest

contracts is with the Romanian Par-liament, which pays for its MPs tolive there, bringing a big portion ofthe hotel's revenues.

With its 290 aparthotel roomsstructured in Centre Ville Elite lux-ury units and in the Centre VilleAparthotel hotels, the complex isthe biggest of its type in Bucharestand even Europe, says Ashkenazi,who doesn't see any competition onthe local market for the product.“There are only 100 units in total inaparthotels in Bucharest,” he says.“Some smaller aparthotels whichhave been created recently, but anaparthotel needs more than 100units, and there is none bigger thanthis,” says Ashkenazi.

Moreover, the aparthotel is themost profitable business in the hos-pitality industry. It doesn't havepublic areas which come with highcosts, so it can be very profitable.“The aparthotel runs on a 60 percentgross operating margin, which isone of the highest in Europe in thehospitality industry. We finished lastyear with a 60 percent gross operat-ing profit and we are making effortsto stay within 58-59 percent prof-itability, which is still very high,”the general manager explains. In theregion, a good hotel can make a 45to 47 percent GOP, and aparthotelsshould do 55 to 60 percent.

Centre Ville's aparthotel unitsshould bring its owners, the Israeli-owned Bucuresti Turism, a turnoverof EUR 8.5 million this year, ac-cording to Ashkenazi. A furtherEUR 1.5 million should come fromrenting the commercial spaces in thecomplex, while the Radisson SAShotel, also part of the complex, is setto bring in EUR 20 million. “In totalthat’s EUR 30 million, which is notbad given the current market situa-tion,” says Ashkenazi.

The aparthotel, which openedsix years ago after an investment ofEUR 5 million in total, reachedbreak-even point in less than threeyears, which makes it a profitablerecipe on a market with little com-petition on the segment. CentreVille's shareholders were initiallyplanning to build a chain of similarunits in Romania, but that was be-fore the crisis hit. Plans havechanged, at least for the time being.“Two years ago I said we wanted tobuild a chain of aparthotels, but nowwe are being very careful. There isdemand, in at least one of the bigcities. We were also searching foropportunities in developing coun-tries, like Georgia, the Czech Re-

public and Croatia. After we getthrough the crisis we can look at achain of aparthotels under the Cen-tre Ville brand in the region,” saysAshkenazi. “Now the market is dif-ferent. Two years ago I could tellyou that another two aparthotelswith more than 100 apartmentscould have survived. Entering themarket with a new aparthotel brandnow would be too risky.”

Yaron Ashkenazi is currently su-pervising the planning of a newaparthotel to be built within theCasa Radio mixed project, a PlazaCenters development, which will al-so host a hotel unit, for which theoperators have not yet been decided.

The hotel is now investing inmarketing, sales and publicity, andbranding. “If we have low occupan-cy during a weekend we can closethe floors. We are not hiring newpeople. We are looking at numbers,at food costs – we go to our ownsuppliers,” says the general manag-er, listing some of the anti-crisismeasures his firm is taking. “We arefighting now like lions, becausehigh occupancy doesn't come easily.The market is much harder nowa-days,” adds the businessman. Forexample, the hotel is selling a ro-mantic weekend in the aparthotelwith some services included for 799lei, or the equivalent of EUR 200,an offer which targets local guests.

The Centre Ville complex in-cludes a Le Bistro restaurant, whichwas recently renovated at a cost ofEUR 2 million, and a World Classunit.

[email protected]

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Yaron Ashkenazi, general manager of the Centre Ville hospitality complex

“Centre Ville opened sixyears ago to answer demandfrom expats seeking accom-modation in Bucharest. At thetime the price per night wasEUR 150 and the length ofstay was 15 nights per month.Centre Ville offered apart-ments for an entire month forEUR 2,000, and was subse-quently full from the first day.Last year, during the week, wehad a 100 percent occupancy,and during the weekend, 93-94 percent. Nowadays, midweek it is close to 100 percentoccupancy, and during theweekend, about 86-87percent.”

Yaron Ashkenazi


A N A L Y S I S

The outlook for the cable industry this year is not pretty: the sectoris expected to stagnate overall. While internet will still be dynamic,the downturn in landline services and the re-transmission of TVcontent will curb the enthusiasm. In this latter category, users willcontinue to switch from analogue cable to DTH services. To hangonto their clients, operators are having to cut their prices, keepingprofit margins and investment budgets low.

Cable industry: internet growth, TVand landline stagnation, at best

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Crossed wires: telecom firms are slashing prices to hold onto their customers – but will it backfire

By Otilia Haraga

Cable industry statistics in mid2008 looked like this: for re-transmis-sion services of audio-visual content,there were 543 suppliers, 28 fewerthan the end of 2007, mainly due toacquisitions. This shows that the mar-

ket is in a process of consolidation,according to Catalin Marinescu, pres-ident of the National Authority for Management and Regulation inCommunications of Romania (AN-COM).

The authority’s report on the localelectronic communications market forJanuary 1-June 30, 2008, found the

number of subscribers to these servic-es on June 30 was 5.58 million, 6.5percent up on the 5.24 million at theend of 2007. Approximately 2 millionof these had signed up for satellite orDTH (direct-to-home) services, a 16.4percent growth compared to the endof 2007. CATV (cable TV), alsocalled analogue cable, subscribersnumbered 3.6 million, only 1.8 per-cent up on the end of 2007.

“On the TV program re-transmis-sion market, competition is extremelyfierce. Consequently, profit marginsand therefore investment budgets areslim. Loan conditions will not encour-age a strategy of rapid investment. Asa result, cable operators’ tendency toopt for digital television is moderatedby the economic conditions,” says Radu Petric, president of the Ca-ble Communications Association(ACC).

“I have no reason to believe thatcable television is a market that willincrease. There will be, however, agrowth in satellite television, as manycustomers will switch to DTH to thedetriment of analogue cable,”telecommunications consultant Nico-lae Oaca tells BR.

The total number of broadband in-ternet connections at fixed points reg-istered on December 31, 2008,amounted to 2.51 million, a penetra-tion rate of approximately 11.7 percent. Broadband internet connec-tions through cable dropped by 2 per-cent from 52.8 percent at the end of2007 to 50.7 percent at the end of2008.

The penetration rate of broadbandin Romania (calculated in relation tothe number of inhabitants) amountedto 11.7 percent, half the EU average.ANCOM estimates that this sectorwill continue to grow this year, bothfixed and mobile internet.

“Internet will be the sector whichwill grow the most. While last year in-ternet increased by 30 percent, thisyear it might increase at a slower rate,but still a two-digit one,” says Oaca.He adds that landline telephony mightstagnate, “although it is fair to say thatit will survive since, in times of crisis,Romanians will go for the cheapestphone. In Europe, the telephony mar-ket has decreased, but Romania hasone of lowest penetration rates – 23percent, or one phone for every twohouses.”

For companies such as Romtele-com, the largest landline operator,landline users have been retained byinternet and satellite television (DTH)services. Romtelecom’s most consis-tent revenues, representing 55 percent

of total revenues at the end of 2008,came from landline use. However,landlines are losing ground to thenewer services offered by Romtele-com: broadband, data and satellite tel-evision.

“Everywhere in the world landlinetelephony is decreasing. Romtelecomhas managed to keep the rate of dis-connections (network switch-offs) un-der control – at the end of the firstquarter of 2009 it amounted to only1.5 percent,” says Cristina Popescu,PR manager at Romtelecom. At theend of Q1 2009, Dolce, the company’ssatellite TV service, had 724,000clients. Romtelecom posted revenuesof EUR 869.8 million at the end of2008. At the end of Q1, 2009, the op-erator’s revenues were EUR 201.4million.

The segment that has posted thehighest growth for UPC Romania wasdigital TV, and the company intendsto invest further in the network. “In practice, television should be seenas a whole because some of the ana-logue cable clients have chosen toswitch to digital services. In the firstquarter of this year, the number ofanalogue TV users was 961,000,”says Raluca Milin, marketing & salesdirector of UPC Romania. Internet re-mains a growth engine for the firm, “a segment that we will focusmore and more on this year,” addsMilin.

UPC Romania has an investmentbudget of EUR 52 million for 2009.Some EUR 30 million will be put intothe network while the rest will bespent on various technological servic-es. The company entered the localmarket 17 years ago and has rolled outoverall investments of EUR 700 mil-lion. In 2007, UPC invested USD 45million and last year spent USD 40million on modernizing its networkand expanding digital television serv-ices.

UPC Romania’s customer baseamounted to 1.26 million users in thefirst quarter of 2009. “Since last year,we have concentrated largely on digi-tal television services, and we haveencouraged customers to switch fromanalogue to digital,” says Milin. Atthe end of the first quarter of 2009, thetotal number of digital TV clients was147,300, a 34 percent growth sincethe end of 2008. In Q1 2009, the firmalso posted growth for internet, satel-lite television and telephony. “Thenumber of UPC internet subscribersin the first quarter of 2009 is 245,300while the number of subscribers fortelephony services is 131, 300,” saysMilin.


A N A L Y S I S

HOW ECONOMIC UNCERTAIN-TY AFFECTS M&AS

Certain factors can alter economicindicators for the communicationssector in Romania, such as the aver-age revenue per user (ARPU), whichwill probably be affected by the evo-lution of the currency exchange rateas well as current customers’ reduc-tion in use, says Marinescu. He alsopredicts that some smaller internet,cable and telephony players might notmake it on a market of offers that aremore and more advantageous toclients and may be forced to sell someof their shares or merge with othercompanies.

“It is natural for the market to con-solidate through M&As, even more soin periods of economic crisis,” saysMarinescu.

The main risk that companies runin this period is poor cash flow. “Gen-erally, in times of crisis companies’cash flow is in grave danger, so, if acompany has problems with its cashflow, one solution would be to sell it.If there are players that are largeenough to be taken over by otherfirms, yes, this would be a good timefor such transactions. It is a time forconsolidation, the winners being in-ternational companies with deeppockets,” says Oaca.

Still, a large firm from abroad thatwas eyeing the local market for acqui-sitions would only consider compa-nies that are worth “at least a few tensof millions of EUR,” says Oaca. Atthis point, the market price of compa-nies has fallen.

“The value of a company is calcu-lated using EBITDA by a multiplier.For example, if a company’s EBITDAis EUR 100 million, its market valuewill be EUR 500 million with a valueof 5 as multiplier. Lately, these indica-tors have dropped, which means thatthe companies’ value has decreasedtoo, making them attractive takeovertargets.”

Recently, daily paper BusinessStandard reported that Turk Telekomwould be interested in investing EUR1 billion in the region, including onthe Romanian market. The publica-tion also wrote that OTE Group wasin negotiations for the takeover ofTelemobil (Zapp), a report which wasdismissed by both companies as “ru-mors.” Commenting on these articles,Oaca says this information is contra-dictory.

“I do not understand why SaudiOger, majority shareholder in bothTelemobil and Turk Telekom, wouldsell, if he is planning on investing in

Romania,” he says. “There is no great appetite for

buying smaller networks at this time,”says Petric, adding that acquisitionsare not advisable now while there isuncertainty over the future of the mar-ket. “The climate of competition be-yond the dumping limit along with theglobal evolution of the economy ren-ders any acquisition speculation,”says Petric, who describes the move-ment of prices on the TV, internet andtelephony market as in freefall.

“Tariffs have dropped a lot, and I

expect them to start rising, not to con-tinue their fall. Up to now, the strate-gy has been to undercut the competi-tion. I think we have reached a pointwhere operators will have to adoptother strategies. Otherwise, the nextstep will be to offer services free ofcharge. I think aggressive price-cut-ting has a significant impact on themodernization speed of the networks,the introduction of new TV programsand high-speed internet,” says Petric.

During the crisis, operators would

prefer to lower prices and therebykeep their clients rather than losingthem, because it is more difficult toget them back later. “So far, Romtele-com and UPC have dropped prices.The only player that has increasedprices is RCS&RDS, which mightcome out of this period slightly affect-ed. Although RCS&RDS denomi-nates its tariffs in RON, the companyhas so far increased its prices twice,which may be a little confusing for itsclients who have hitherto been accus-tomed to small tariffs,” Oaca adds. �


A N A L Y S I S

Real estate and capital markets are the only two areas of investments inRomania for Plori Capital and Consulting, which manages EUR 7 millionworth of assets belonging to 21 foreign business people. GERASIMOSVERGOTIS, the company’s investment director, told Business Review thatPlori has recently exited from half its Bucharest Stock Exchange equitiesand plans to invest in office buildings towards the end of the year.

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Gerasimos Vergotis has moved from soft drinks into funds

By Dana Ciuraru

Gerasimos Vergotis started hiscareer in 1989 as a financial analystat PepsiCo’s headquarters, where hecontinued to work for ten years. Hisname became linked with Romaniaafter he left PepsiCo and, drawingon his experience, he started PloriCapital and Consulting, an invest-ment vehicle with operations on thelocal market.

The company was established inRomania in April 2005 with the pur-pose to advise and manage the realestate and capital markets invest-

ments of the close fund’s clients.According to company information,the shareholders of the company areVergotis and Spring Creek CapitalLimited, a Cypriot company inwhich Vergotis controls the majorityof the shares.

Looking back at his first invest-ment in Romania, Vergotis remem-bers his fear. “My first investmenthere was an apartment. I was petri-fied, to tell you the truth. Thelawyers that were recommended tome by a bank had their office in anapartment building in Unirii. It wasnot what, traditionally, one wouldexpect. Incomplete documentation

and an incomplete title – I saw themwith my very first purchase. It was alearning experience because lots ofthe issues one has to be carefulabout I saw with my very first pur-chase,” Vergotis told Business Re-view.

According to him, Plori’s clientsare 21 business people who havemade investments in Romania. “Inthis close fund there are no Romani-ans, they are mainly Greek investorsand one investor each from the US,Mexico and Switzerland. Our totalinvestments in Romania in real es-tate, at acquisition value, reacharound EUR 6 million and anotherEUR 1 million has been invested inequity on the Bucharest Stock Ex-change (BSE),” said Vergotis. Com-pany data show that Plori’s invest-ments in Romania represent 15 per-cent of the assets managed by theparent company. Four years ago theminimum limit to enter the fund wasEUR 100,000, and since then it hasbeen raised to EUR 200,000.

THIS YEAR, OFFICE BUILDINGSRomania is the only country in

which the firm manages real estateassets. Plori Capital and Consult-ing’s real estate portfolio includes38 apartments in two residentialcomplexes and various parcels ofresidential land totaling 107,000sqm. The land is situated on nation-al roads 1, 3 and 7. Plori stoppedbuying land in 2006 because theprices were becoming too high.

“We advise our clients to investin the residential sector for somefundamental reasons. First of all, thehousing stock in the metropolitanarea of Bucharest is very poor. Sec-ondly, the space per capita for theexisting households is very low.There will be a need for new con-struction and one can only build onland,” said Vergotis.

At the moment, the Plori in-vestors expect a 13 percent yield onincome properties, a level thatmight be reached by the end of thisyear, says Vergotis.

According to him, a reasonableprice for a studio apartment is be-tween EUR 30,000 and EUR35,000, for a two-room apartmentbetween EUR 55,000 and EUR60,000 and for a three-room oneabout EUR 85,000. Could prices geteven lower? Vergotis thinks thatprices on the residential sectormight drop by another 20 percent,before they start bottoming out.“Currently, some 60 percent of thebuyers in the market expect the

prices to drop,” says Vergotis.The Plori investment director

says that the main market impedi-ment is the low level of mortgagelending. “Bank representatives say that they are willing to do this butthere isn’t anyone out there askingfor the money. We know that people are asking but banks arenot approving anybody,” said Ver-gotis.

He added that Plori is interestedin investing in office buildings,most probably towards the end ofthis year.

GOOD RETURNS ON THE BSE“We started investing on the

BSE in 2004 and we exited those in-vestments at the end of 2006 and thebeginning of 2007. After the bigcorrection registered by the marketthat year, we re-entered on the BSEin October the same year. Those eq-uities we sold at the end of February2008,” said Vergotis of Plori’s be-ginnings as a player on the BSE.

According to him, Plori stared tobuy shares on the stock exchangeagain towards the end of Octoberlast year when the crisis hit and themarket was dramatically down. “Webought little by little until the end ofFebruary this year. We started sell-ing about two weeks ago and wehave significantly reduced our posi-tions on the BSE by 50 percent,”said the businessman.

Plori invested a significant sumof money in the Transelectrica IPO.“We sold in about three months atabout 100 percent profit,” said Ver-gotis. “We would more than wel-come more quality IPOs like Trans-electrica, but, unfortunately, in thecurrent environment, we will haveto wait a year or so.”

What can be seen is that thecompany’s portfolio has changed inthe last few years. “We are lookingat different things now comparedwith what we were interested in2004. Then I was interested in thefinancial sector, meaning BRD,Banca Transilvania and the SIFs.We bought shares in that sector al-most exclusively. We also had somepositions with some Rasdaq compa-nies such as Compa Sibiu, Iproeb Bistrita and Biofarm,” saidVergotis.

Real estate and capital marketswill remain the main areas of in-vestment for Plori, as these two do-mains currently offer attractiveprices and a worthwhile risk-rewardprofile, added the director.

[email protected]

Plori keeps the focuson property and stocks

JUNE 1 - 7, 2009 / VOLUME 14, NUMBER 20

BUSINESS REVIEW FORUM Manage your business environment !

Estates&ConstructionMARKET

New Omilos CEO focuses on finalizing leases forOradea and Iasi, includes turnover rent agreements

Cypriot-owned developer OmilosGroup is focusing on leasing the re-mainder of its Era Shopping Park re-tail projects in Iasi and Oradea, whilerevising its leasing structures to in-clude turnover rents. “Many agree-ments signed three months ago needto be revisited. Now we are including

a turnover rent provision, along withthe fixed rent. It is common in Europeto include turnover rent, which is abenchmark for owners to evaluate thesuccess of a tenant and the shoppingmall, and identify the weak areas,”Graham Kilbane, the new generalmanager of Omilos Group, told Busi-

ness Review. Usually, retailers payfrom 6-10 percent of their turnover asrent.

Kilbane, who came from Ukrainewhere he worked for Cushman andWakefield as chief operating officer,has made leasing in the two Omilosprojects his priority. “It is the mostchallenging thing for developers now,in other countries as well, because re-tail demand across the region hasdropped significantly,” he says.

The first phases of Omilos's retailprojects in Iasi and Oradea have al-ready been completed, with 90 per-cent occupancy in Iasi and 85 percentin Oradea. “The last few units are un-der negotiation and by Q4 of this yearOradea will be 95 percent leased. Thesecond phase of the project in Oradeais 40 percent under heads of terms,”says Kilbane.

The second phase of Omilos's re-tail project in Oradea is currently un-der construction, with an expected de-livery between March and May nextyear. Its retail project in Iasi, whichshould reach 150,000 sqm of leasablearea when finished, is bigger than theOradea project, and will require EUR175 million of investment in total.With the first phase of the project al-ready open, Omilos is on the point ofselling some of the land to a sports re-tailer which would build a big boxunit there. “Certain plots there areavailable for sale, others for rent. Thenext phases could take two-threeyears to be finished,” says Kilbane,adding that the developer is redesign-ing the next phases to suit the newmarket demand.

continued on page 14

Graham Kilbane, the new general manager of developer Omilos Group

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E S T A T E S & C O N S T R U C T I O N M A R K E T

Norwegian investment fund Roma-nia Invest has secured a EUR 1.6 millionloan from Bank of Cyprus to pay the 25apartments it has acquired within theBucharest residential project My DreamResidence, the company has announced.

“We have signed the first contractwith Bank of Cyprus for the financingoperations for the My Dream Residenceproject and we are considering furthersuch contracts with the bank,” saidBjorn Hauge, country manager of Ro-

mania Invest. The fund will also comeup with a financing scheme for end usersof the apartments in its portfolio.

Recently, the fund launched BeIgloo, a company which will sell itsstock of apartments in Bucharest. Roma-nia Invest plans to continue buyingapartments in Romania but also to startup as a developer, according to Hauge.He does not believe that residentialprices will continue to drop excessively,and thinks that the market will unblockwhen customers start buying again.

According to Elena Lavric, corpo-rate manager of Bank of Cyprus, the fi-nancial institution holds a market shareof 0.6 percent of the local lending seg-ment, and plans to increase its creditportfolio by 10 percent by the end of2009. Bank representatives said theirnumber of non-performing loans was al-most zero. Since it started operations inRomania in 2006, the fund’s portfoliohas reached 800 apartments in variousdevelopment stages in seven residentialprojects in Bucharest. It expects to post aEUR 30 million profit from selling onthe apartments, in which it has investedEUR 85 million. �

Romania Invest borrows EUR 1.6 million from Bankof Cyprus to pay for 25 apartments

Real estate fund Equest’s retailpark Vitantis Shopping Center couldmake some changes to the mix ofstores in order to include more lowpricing units, according to RazvanGheorghe, general manager withCushman & Wakefield Romania.The shopping center has attractedalmost 2.3 million visitors since itslaunch in September 2008. The av-erage number of visitors was esti-mated at 312,000 per month. In thelast quarter of 2008, the retail parkexpanded with a 75-shop commer-cial gallery, representing the thirddevelopment stage of the project,estimated at a total investment ofEUR 60 million.

Vitantis Shopping Center deliv-ers 34,000 sqm of rentable area andcomprises the 11,400-sqm shoppinggallery, furniture center MobilaBontas, DIY unit Praktiker, Carrefour hypermarket and house-hold appliances retailer Technomar-ket.

Equest Investments is the Ro-manian subsidiary of Equest CapitalLimited, which runs Equest BalkanProperties (EBP) investment fund.Last year, investment fund EBP saidit planned to focus on developmentsin Romania, with three retail and lo-gistic projects in the pipeline for thecountry in the coming period. Thefund said it was not planning tomake an exit in Romania, but was inthe process of selling a significantmature asset it held in another coun-try, in order to finance its pipeline ofinvestments in Romania, accordingto its representatives.

In March, Bank Austria Credi-tanstalt said EBP had breached theconditions in the loan contract forthe commercial center MoldovaMall in Iasi. The loan was taken outby the firm in 2006. According tothe investment fund, this was notexpected to impact on EBP's otherassets or borrowing.

Staff

Vitantis Shopping Center sees 2.3 mln visitorsin eight months, re-thinks commercial mix

Vitantis Shopping Center saw 312,000 visitors per month since opening

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continued from page 13“Retailers decide early when

picking their locations, so theycould make decisions 12-18 monthsin advance. It is not unusual to havea retail project 40-60 percent pre-leased before the start of construc-tion. But in this market, a lot of re-tailers need to see the project underconstruction. Retailers are signingthe heads of terms but then taking alonger period to negotiate thelease,” Kilbane explains.

Omilos's Era Shopping Park in

Iasi was opened in September lastyear, when the Carrefour unit, Altexstore and shopping galleria were in-augurated. The park also includes aPraktiker store. The project inOradea was opened in March thisyear, with a Bricostore, Carrefour,shopping galleria and Media Galaxyunit. The developer, which has se-cured bank financing for both itsprojects, expects to invest EUR 300million in expanding them in thenext few years.

Corina Saceanu

From this year, a new real estateexhibition has place at Palatul Copiilor,with the dedicated purpose to helpyoung families buy an apartment.

Be Igloo, the sales organization forRomania Invest sustained this projectever since its first edition and now, atthe second one, that had place be-tween 29 – 31 May, they came with800 apartments in seven residentialprojects from Bucharest and with thesmallest prices possible: euro 98 000for 2 rooms apartment and 64 000 forone room.

The most important thing that re-ally helps the young people to buytheir house, is that Be Igloo alwaysfinds a financing solutions for theirclients and this seemed to be the ma-jor advantage for most of the visitors,because all of them were in the samesituation: they couldn’t afford to paythe advance that the other banks ordevelopers asked for.

For further details about these new solutions you can visit www.beigloo.ro or you can call at +4 0372 744 777/8

Be Igloo at the Project Exporeal estate exhibition

International Investments Fund purchases, on adjusted price, any build-

ing with business potential in Bucharest:� STORES� OFFICE BUILDING� RESIDENTIAL BUILDING� HOTELS, etc.

Phone: 0754 034 289

Bjron Hauge, country manager with Romania Invest fund

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E S T A T E S & C O N S T R U C T I O N M A R K E T

The local distributor of construc-tion and finishing materialsArabesque, owned by Romanianbusinessman Cezar Rapotan, hasopened a commercial center in Pitestiat a cost of EUR 5 million, its secondproject this year, the other being themixed-use center it opened in the Gli-na area of Bucharest. In the capital,

Arabesque owns two more such cen-ters – one in the Otopeni area, with aEUR 4 million in investment, and onein Militari. The store in Otopeni cov-ers some 30,000 sqm of warehousingspace. The two others in Glina andMiliari have a total of 60,000 sqm.

The new center in Pitesti deliversa total area of 34,000 sqm, of which10,000 sqm represents the storage andshowroom areas. So far, Arabesquehas developed 19 commercial centersand 22 subsidiaries in countries suchas Ukraine, Bulgaria, the Republic ofMoldova and Serbia.

In 2008, the company posted aturnover of EUR 550 million, morethan 22 percent up on its 2007 result.From the entire sum, the firm’s exter-nal markets generated EUR 110 mil-lion. The expansion of commercialstores in 2008 resulted in EUR 50million of investments being made bythe company in Romania and theneighboring countries.

Magda Purice

Arabesque proceeds with projectson land acquired in 2008

The Pitesti store required a EUR 5 million investment

The Romanian subsidiary ofFinnish construction materials pro-ducer Rautaruukki plans to achievea market share of 7 percent on thelocal thermal insulation panel seg-ment, with hopes to make EUR 10million of sales in 2009.

The company, which specializesin the production of metallic con-struction materials, entered the spe-cific segment of thermal insulationpanels last year when it also startedproduction in Romania.

This sector makes a EUR 134million market locally, according toRuukki’s estimation.

Last year, the Finnish companyannounced its plans to restructure itsoperations in the CEE region, mean-ing it would close its Czech-basedplant in Ostrava, with relocation ofproduction to the company's otherplants in countries such as Hungary,Poland and Romania. The reloca-tion was planned to be completed bythe end of Q1 2009. Through thismeasure, the company plans to im-prove its operational profit by EUR3 million from 2009. In Romania,Ruukki opened its first productionline in 2007, following an invest-ment of EUR 35 million.

Magda Purice

Ruukki Romania plans to make EUR 10mln sales from thermal insulation panels

The company produces metallic contruction ma-terials

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R E S T A U R A N T R E V I E W

Bucharest beachP o o l s i d e B r u n c h a t t h e R a d i s s o n . B o o k i n g a d v i s a b l e 0 2 1 3 1 1 9 0 0 0

In 1995 the French Village in Heras-trau opened as the nation’s firstcountry club. That meant it had a

pool, a court, a grass lawn and a fitnesscenter the size of a telephone kiosk. Itwas an oasis of calm which soonchanged into a desert as standardsdropped, and after a few good yearsthey went bust!

So step forward the Radisson as itsreplacement after a hiatus of some eightyears. They share some facilities withtheir neighbour, the huge World ClassFitness Center, so if you wish to use theRadisson’s outside pool, tell your wait-er and you can use the gym’s changingrooms.

I arrived on Sunday for brunch tofind the place packed with hundreds ofguests. Not all were dining, as theHouse allows day guests to use the poolfor a small fee. Most of them were drop-dead gorgeous female poseurs.

Irrespective of how wealthy theyappeared to be, I suspect they were toomean to pay for a brunch or to use thepool bar as I saw several of them sneak-ing in their own drinks in their dubious-ly authentic Prada bags. But I came toeat, so let’s get on with it!

It is a new menu which means it is

not the original brunch moved out ofdoors. As befits an al fresco extravagan-za, the meat carvery is based upon aBBQ. But not the open charcoal barbieyou have loved to hate every summer ofyour life. This is a sophisticated smok-ing engine.

Wood and charcoal are burned in asemi-sealed grill, and the food is placedin a chamber whereby smoke passesover the food. This means the meat andfish is massaged in smoke, keeping allof its moisture rather than being burnedon an open grill.

The effect is dramatically differentand it is vastly superior to the tradition-al ‘old’method. Another departure fromthe ‘old’ barbie is that the Rad chefs donot start the fire with petrol-soaked,

packaged firelighters, which alwaysmade the meat taste like a gas station at-tendant’s jock strap.They do it the hard,slow way with a flame.

And what meat it was. I gorged ontender Argentinian sirloin steak togetherwith juicy New Zealand lamb. By thatpoint I had had my money’s worth butthere was far more to come. I had wholedorada, smoked spare ribs, trout, giantprawns and chicken tandoori.

Under the shade of the pool barthere was a chilled seafood section withmarinated calamari, lobster cocktail,gravadlax and smoked salmon.

Away we go to the antipasti stationwhere there was freshly baked bread,pickles and olives, mushroom salad,eggplants stuffed with sun dried tomatoand crème fraiche, terrines and more.

By this stage I was far too full to eatany more. So I passed on their Asian stirfried beef together with their Thai greencurry, which judging from both appear-ance, aroma and satisfied customers, Iassume were a great success.

Desserts were administered by theFrench pastry chef, Fabrice, whose cre-ations were too numerous to mention.Suffice it to say they change weekly andare miniature works of art.

But all was not perfect in Paradiseas their cheese section failed and need-ed improving. But this tiny defect palesinto insignificance when compared toall the fabulous positive points I en-joyed.

And I was not alone in my enjoy-ment. Although the brunch was sup-posed to close at 4 pm, it was still halffull with almost 80 happy brunchers stillrevelling at 6.30 pm. They simply didnot want to leave.

I must close by making one lastcomparison with the now defunctFrench Village. It was dominated bynumbers of obese American parentswho smiled benignly as they watchedtheir screaming, running, out of controltwo legged rodent offspring making lifea misery for the guests as they divebombed each other in the pool. Fortu-nately, the guests at the Rad are Euro-pean with kiddies who are both courte-ous and disciplined and who were hap-py with their candy floss and importedItalian ice cream.

They all behaved themselves, andso did I!

Michael [email protected]

Life’s a beach: poolside brunch at the Radisson

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Canadian jazz singer DIANA

KRALL will perform in Bucharest

at the Palace Hall on November

22. The concert is part of a tour for

the promotion of her latest album

“Quiet Nights,” which has already

been released in Romania by

record company Universal Music.

Krall is well known for her unique

voice and manner of interpreta-

tion. She was born in Canada to a

family of musicians and started

taking piano lessons when she was

four. She released her first album

“Stepping Out” in 1993. Her

records have ranked high in the

Billboard charts and earned nu-

merous platinum discs, nomina-

tions and prizes, including two

Grammy awards. Tickets for the

concert are on sale at www.myt-

icket.ro and from the network of

the Diverta stores for RON 100,

150, 220, 300 and 500.

Top American band LIMP BIZKIT will play Bucharest on June 28 at the Arcul de Triumf stadium as

part of the festival “Rock the City.” Bands such as Queensryche and Saga will also headline the event.

Limp Bizkit are coming to Romania as part of their “Unicorns and Rainbows” tour, which will take

them through the Baltic region, Russia, Europe and Japan. The band will also be playing three other

major festivals: Rock IM Ring in Germany, Summer Sonic Festival in Japan (where they share the

stage with Jay-Z) and Werchter Festival in Belgium, where Metallica will also play. “Rock the city” is

organized by D&D East Entertainment with promoter Marcel Avram. Tickets cost RON 130 until May

31 and RON 150 thereafter. They can be purchased from the Diverta and Germanos stores and on-

line at www.Eventim.ro, Ticketpoint.ro, Blt.ro and Bilete.ro.


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On the occasion of Children’s Day, celebratedon June 1, Masca Theater will put on threeshows for children at Liberty Center. The firstplay, “The Clowns” directed by MihaiMalaimare, is due to take place on June 1 at 5pm. It shows children how much generosityand intelligence hides behind a clown’s rednose. The second show, “The Lady with theLittle Dog,” will be staged on June 13 at 11am, when children will see five gentlemenwith a pipe, a lady and a little dog walkingand playing with them. The last show fromthe Masca Theater, “Human Foolishness,”based on a story by Romanian author Ion Cre-anga, will take place on the same day onehour later. In total, 20,000 spectators are ex-pected to attend the shows at Liberty Center.

The 13th edition of RomanianFashion Week has been postponedfrom 2009 to spring of 2010. “Wehave decided to make this changebecause we wish the event to takeplace only at the standards that wehave imposed in past years,” saidfashion designer Irina Schrotter, thefounder of the event. The organiza-tion of a single edition involves ateam of 150 specialists and a budgetfrom EUR 200,000-250,000.

“With all the economic difficul-ties during this period, we were gladto see that our traditional partnersdecided to stick with us. But budgetadjustments determined by theworld economic crisis have made itnearly impossible to cover all ex-penses that this event involves,”said Schrotter.

The organizers did not enjoy

support from the mayor of Iasi,Gheorge Nichita, nor from the Min-istry of Economy, added thefounder.

“Even though Romanian Fash-ion Week is the driving engine of anindustry that generates tens of thou-sands of jobs and an important con-tribution to Romanian exports, theMinistry of Economy decided itdoes not deserve support. We gotthe same answer from the mayor ofIasi,” said Schrotter.

Participants in Romanian Fash-ion Week have included designersDoina Levintza, Agnes Toma, IrinaSchrotter, Razvan Ciobanu, CatalinBotezatu, Liza Panait, WilheminaArz, Rita Muresan and labels likeJolidon, Dinasty, Uniconf and ERFashion.

Otilia Haraga

Romanian Fashion Week postponeduntil spring 2010 due to crisis

The fifth edition of Muuuvi Festwill hit screens on July 31. The festival,which will run until August 3, wasstarted in 2004 by Selyem Andras, fes-tival director, and Aaron Balazs, art di-rector. At that time it was called Muuu-vi – International Short Film Festival.Its aim is to find the most originalmovie character, capable of beatingKenny from South Park or James Bondfrom Agent 007.

In the meantime, Muuuvi Fest is acinema-substitute for the 60,000 inhab-itants of Gheorgheni (the town where ittakes place). Since the local cinema,Miorita, closed its doors, the inhabi-tants have lost touch with movies. Dur-

ing the first four editions of the festival,over 1,000 short films from all over theworld have been showcased, and well-known filmmakers, from the UnitedStates to the Congo, have participated.

Aside from movie screenings, therewill be “parties ‘til dawn,” DJs and dif-ferent bands and visual artists fromLondon and Tokyo. Muuuvi Fest in-vites by July 1 short movies competingfor the BloodyCow award. These willbe judged by an international jury offive members with the trophies madethis year by young artist OroszAnnabella. Other prizes are also up forgrabs.

Otilia Haraga

A passion for fashion – but Romania’s models won’t be sashaying down the catwalk this year

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Get muuuving: the fifth edition of the character driven film festival will take place this summer

Muuuvi Fest gets fifth run


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PASARELA 2009, a fashion festival organized by the FrenchEmbassy and French Institute in Bucharest, took place be-tween May 27 and 31. This was the second edition of theevent established to encourage and support young designers.The topic for this year’s edition was “Marions Nous…” (Let’sGet Married). PASARELA is a fashion competition open to de-signers aged between 18 and 40, students or graduates, whoshare a common passion: fashion. The winner of the compe-tition will attend the presentation of the prêt-a-porter collec-tions of designers in Paris. The jury is made up of fashionprofessionals such as Romanian designer Doina Levintza,president of PASARELA; Philippe Guilet de Saint Mart, artis-tic director of the festival; Ioana Avram, designer and teacherat the Bucharest Art University; and a member of the FrenchInstitute of Fashion.

Fans of British glam rock band PLACEBO can en-joy the band’s latest album while waiting for theconcert in Bucharest, which will take place atRomexpo in Bucharest on June 21. "Battle Forthe Sun” will be on sale in Romania from June 8.It will be distributed locally by MediaPro Musicwhich signed a contract with PIAS (Play it AgainSam), the band’s record label. The new album isPlacebo’s sixth. So far, they have sold over 10million albums and held over 900 concerts. Thenew disc is about “coming out of the darknessand choosing to live in a new way,” according toBrian Molko, the band’s frontman. The first sin-gle off the album, "For What It's Worth,” is al-ready being aired, and is a sample of the moreoptimistic turn the band’s music has taken.

American alternative rock band Faith NO MOREwill be performing in Bucharest on August 15 atthe Polivalenta Hall. The gig is being organizedby King Size Production and Bring The Noise. Itis part of the band’s “Reunion Tour 2009” whichmarks their return after 11 years of absencefrom the music scene. Tickets for the concert willgo on sale on May 28 in Diverta stores. Faith NoMore was founded in 1982 in San Francisco, Cal-ifornia, and have a musical style that has beenlabeled alternative rock with influences fromheavy metal, progressive rock, hip hop, punkhardcore and jazz. The band’s best-known songsinclude “Easy," "We Care a Lot," "Epic,""Stripsearch," "Everything's Ruined," "Falling toPieces," "The Real Thing" and "Last Cup of Sor-row." The group has launched six albums thatsold over 10 million copies worldwide.

Documents

Business Review, Issue 20