Business Review Issue 8/2014 March 10 - 16

INTERVIEW: David Hay, CEO of AFI Europe Romania, tells BR the developer and real estate investor is looking to buy land for additional retail projects and is preparing to invest in residential developments »page 6

ROMANIA’S PREMIER BUSINESS WEEKLY

MARCH 10 - 16, 2014 / VOLUME 18, NUMBER 8

FOCUS HIDROELECTRICA IS BACK IN ADMINISTRATION, AND ITS BVB LISTING PLANS HAVE BEEN PUT ON HOLD, UNDERSCORING ROMANIA’S STRUGGLE TO PREPARE STATE COMPANIES FOR THE CAPITAL MARKET TEST »PAGE 12

WINNING TICKET The 2014 BR Awards brought together the members of the business community who excelled last year, to celebrate the efforts of those who defied the uncertain economic climate to fly the investment flag for Romania » page 8 NEWS

LINKS

New faces

Strength in numbers

The government underwent a third reshuffle last week, with prime minister Ponta claiming the new cabinet would stick to reforms

Romania is seeing several initiatives to secure finance through international and local crowdfunding platforms

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www.business-review.eu Business Review | March 10 - 16, 2014

NEWS 3

NEWS in brief AUTO Daimler merges local distribution operations Daimler will merge its local distribution arms in a bid to streamline sale and post-sale activities in Romania, the German carmaker has announced. EvoBus operations will be transferred to Mercedes-Benz Romania, including the sale of new and used buses and coaches and retail operations. All the firm’s employees will move to Mercedes-Benz.

EvoBus Romania was founded in 2006, following a Bucharest public transport company (RATB) tender for the acquisition of buses and post-sale services.

ENERGY Germany’s STEAG secures financing for 108MW wind farm STEAG, the energy company, has secured financing for the EUR 200 million Crucea North wind farm in the Dobrogea region, said the European Bank for Reconstruction and Development (EBRD).

Austria’s Erste Group Bank is acting as mandated lead arranger, granting EUR 49 million to the project in a parallel term loan structure with the EBRD, which is providing a senior loan for the same amount. BCR, an Erste subsidiary, will provide a EUR 27 million VAT facility.

The Danish Export Credit Agency (EKF) will cover 90 percent of Erste’s loan.

Construction works on the farm started late last year and should be completed by mid-2015.

a gold and silver project at Rosia Montana, has put almost 400 employees into structural unemployment, citing “repeated delays in the evaluation and permitting procedures” of the project, reports daily Adevarul.

According to trade union leader Cristian Alba, the company has suspended the labor contracts of 392 employees through to March 2014. The workers could return to their jobs if the mining project is approved, but their contracts will be terminated if it is rejected.

Some of the employees worked in the company’s patrimony department and were restoring houses in the project’s protected area. Others were working on making the Catalina Monulesti gallery accessible to tourists, and in the communication and relocation departments. RMGC, majority owned by Canada’s Gabriel Resources, has been seeking to start the Rosia Montana project for 15 years, but successive governments have postponed a final decision.

Romania: EU carbon goals need to be ‘realistic’ A group of Central and Eastern European nations, including Romania, have called for the 2030 carbon goal to be set at a “realistic level, following a meeting of EU energy ministers.

In a joint statement, Hungary, Poland, Czech Republic, Slovakia, Bulgaria and Romania also called for officials to take into account United Nations talks about a global deal to be agreed in 2015. They added that the EU emissions-trading system should remain the core tool for Europe to meet its emission-reduction goal.

Local renewable capacities exceed 4,400MW in January 2014

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Romania’s incentivized renewable capacities reached 4,412 MW in January 2014, on the back of soaring investments in wind and solar, although changes to the legal framework have put a brake on new investments.

According to grid operator Transelectrica, wind sector capacities totaled 2,704MW, while photovoltaic has grown to 1,077MW. The hydroelectricity sector posted 536MW, while biomass edged close to 100MW. The biggest investments were made by large foreign utilities including Czech utility firm CEZ, Austrian energy company Verbund, and Italy’s utility firm Enel.

Accenture completes acquisition of evopro business, with local operations

RMGC puts 400 in structural unemployment over gold project ‘approval delays’ Rosia Montana Gold Corporation (RMGC), the mining firm aiming to start

Accenture has completed the acquisition of the industrial and embedded software development and services business of evopro group, a software development and engineering services company headquartered in Budapest.

Evopro is represented in Romania

by Linepro group, which owns the company Evoline, headquartered in ClujNapoca with a branch in Targu-Mures.

The acquisition, announced on November 28, 2013, will enhance Accenture’s ability to help industrial companies maximize the return on their investment in industrial software and automation by strengthening its software development skills, according to officials. It is also intended to support Accenture’s digital initiatives.

RETAIL Retail sales recover in January Romanian adjusted retail sales rose 2.4 percent in January compared to the previous month, due to higher sales in all sectors, according to data released last Tuesday by the National Institute of Statistics.

Sales of non-food products increased 2.9 percent month on month in January, according to data adjusted for the number of working days and seasonal factors. Food, drinks and tobacco sales were up 1.9 percent compared to December, while fuel sales rose 0.2 percent.

TELECOM State signs consultancy contract for Romtelecom privatization The Romanian Ministry for Information Society has signed a contract for the provision of consultancy services with representatives of the consortium headed by SSIF Swiss Capital, which also includes UBS Limited, Musat si Asociatii, and BT Securities.

The deal was signed on February 28.

Hogan Lovells, Banca Transilvania and KPMG Advisory are subcontractors.

Two consortiums submitted offers, with the other contender made up of Deutsche Bank AG (London) and Raiffeisen Capital & Investment, with Clifford Chance Badea as subcontractor.

The aim is to sell the shares the Romanian state has in Romtelecom at maximum profit. The consultant will receive 2.085 percent of the gross profit from the sale of all, or part, of the shares, including all the taxes stipulated by law, including VAT.

COST OF LIVING Bargain Bucharest ranked among ten cheapest world cities to live in The Economist Intelligence Unit’s latest Worldwide Cost of Living survey has ranked Bucharest among the ten cheapest cities for expats to live in.

According to the report, Bucharest comes 125th out of 131 cities around the world ranked by the cost of living, moving up one position from the last report when the Romanian capital was ranked 126th. Singapore topped the list

WEEK AHEAD March 12 National Competitiveness Strategy Presentation AmCham will host a presentation and discussion facilitated by Dragos Paslaru, general manager of GEA Consulting. As feedback to the National Competitiveness Strategy is also on the agenda of the Competitiveness and Investment Climate Task Force within Coalitia pentru Dezvoltarea Romaniei, members of participating organizations (AmCham Romania, FIC, RBL and AOAR) are invited to learn more about the current draft of the strategy and provide their input.

AmCham Conference Room, 10.00-12.00

March 13-16 The Romanian Tourism Fair The Romanian Tourism Fair, organized by Romexpo twice a year, gathers together elite specialized companies from Romania and around the world.

The spring edition of TTR will take place from 13-16 March, in C1, C2, C3, C4, C5 and C6 Pavilions of the Romexpo Complex.

From: 10.00. Entrance: RON 15

March 15-16 Born 2 Succeed Born 2 Succeed is the only event of its kind dedicated to helping young, ambitious entrepreneurs and people who want to make a change in the world get the most cutting-edge and invaluable advice to turn their ideas into reality. It is also a unique opportunity to see three of the best personal empowerment coaches in the UK: Tosin Ogunnusi, Ketan Makawana and Justin Devonshire. More information about the conference, agenda and registration form on the born2succeed.ro website.

Marshal Garden Hotel, Bucharest

of the most expensive cities to live in, followed by Paris and Oslo in second and third place respectively. Two cities in Saudi Arabia, Riyadh and Jeddah, were found to be the world's least expensive cities to live in, followed by Panama City in Panama.

The bi-annual report, which ranks 131 global cities, gathers detailed information on the cost of more than 160 items – from food, toiletries and clothing to domestic help, transport and utility bills – in each city.

www.business-review.eu Business Review | March 10 - 16, 2014

4 NEWS POLITICS

PM in third cabinet reshuffle since 2012 Parliament approved the third ministerial reshuffle since the 2012 elections last week, following the disintegration of the center-left coalition, the USL. The prime minister, Victor Ponta, said the new cabinet would stick to the reforms included in the EUR 4 billion stand-by agreement with international lenders.

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1. Nicolae Banicioiu, minister of health 2. Florin Jianu, minister for SMEs, the business environment and tourism 3. Attila Korodi, minister for environment and climate change 4. Ioana Petrescu, minister of finance 5. Constantin Nita, minister of economy 6. Dan Sova, minister of transport 7. Rovana Plumb, minister of labor 8. Razvan Nicolescu, delegate minister for energy The new cabinet has 25 positions, seven of which are occupied by ministers on their first mandate, while four are deputy PMs. The new government also includes members of the left-wing party UNPR, the center-right Conservative Party (PC) and the Democratic Alliance of Hungarians in Romania (UDMR). All the new ministers were approved by specialized committees in Parliament.

“All the fundamental policies of the governing program will be respected. I want to assure my liberal colleagues that any change in the 16 percent flat tax rate is out of the question. We will try in this new line-up to have as the first point of discussion this April, with the joint mission of the European Commission, the International Monetary Fund, and World Bank, both the tax exemption of reinvested profit and the reduction of social security contributions,” said Ponta in Parliament.

Crin Antonescu, Ponta’s former political partner, resigned as president of the Senate, claiming this signaled the official exit of the National Liberal Party (PNL) from the ruling coalition.

During the same Parliamentary meeting, the opposition said it had submitted a complaint to the Constitutional Court,

claiming that the governing program had not been put up for vote.

The PM announced on Wednesday evening that he had struck a deal with President Traian Basescu on vetting the new cabinet. He said the updated governing program would be submitted to MPs.

Finance Ministry gets Harvard alumnus Ioana Petrescu, 34, has become the new finance minister, after working as an economic advisor to Ponta since September 2013. She holds a bachelor’s degree in Mathematics and Economics from Wellesley College and a master’s degree and PhD in economics from Harvard University.

From 2010 she was adjunct scholar at the American Enterprise Institute, a think tank, and assistant professor at the University of Maryland, College Park, in the School of Public Policy.

Petrescu, who was taunted by MPs over her lack of experience in policymaking, outlined some of the fiscal measures that could support the business community. She talked about exempting companies that create new jobs from paying the related labor taxes, and re-

ducing social security contributions for firms.

Razvan Cotovelea, the new minister for information society, said in the committee hearings that the technical infrastructure in public institutions had to be modernized using EU funds.

Attila Korodi, the environment minister, noted that the controversial mining project at Rosia Montana had been stopped on legal grounds, adding that he was against any changes in the mining law, which would regulate new projects of this scale. On shale gas, Korodi hinted that the ministry could ask for independent studies on the impact of this industry on the environment.

The new delegate minister for energy is Razvan Nicolescu, 36, the former director of public affairs and regulation at Austria’s oil major OMV Petrom. He is also vice-president of the administration board at the Agency for Cooperation of Energy Regulators (ACER).

“The sector needs investment and a political environment that offers predictability. Thinking that Romania has billions at its disposal is utopian. (…)

State-owned companies have great potential and should harness it. Local capital needs to be encouraged. There are

foreign investments that can contribute.

All these need to be correlated with an objective I really believe in: Romania becoming a country that is almost energy independent around 2020,” said Nicolescu during the committee hearing, quoted by newsportal www.hotnews.ro Dan Sova, the new transport minister, said during the Parliamentary hearing that the Sibiu-Pitesti highway, a project that could help Dacia, the carmaker owned by France’s Renault, cut delivery times, would be constructed.

The new health minister, Nicolae Banicoiu, said he was aiming to build a team comprising high-ranking names from the local medical system, adding that some of the “good” measures started by former ministers would be continued.

He commented that the Ministry of Health needed to “harmonize” its opinion on changes to the pricing of drugs.

The draft bill regulating this move was quickly withdrawn from public debate last month.

Florin Jianu, the minister for SMEs, the business environment and tourism, said he wanted to increase the number of SMEs per 1,000 inhabitants, which is currently half the EU average. ∫ Ovidiu Posirca

www.business-review.eu Business Review | March 10 - 16, 2014

NEWS 5

ENERGY

MARKETING

Made in Romania ROM chocolate R

NIS Petrol declares itself open to acquisitions

Courtesy of NIS Petrol

Ileana Baltatu, executive director of NIS Petrol Romania

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erbia-based NIS Petrol, the oil company majority-owned by Russian Gazprom Neft, says it is open to acquiring filling stations in Romania from other players, as part of its strategy to gain a 10 percent market share in the coming years.

Ileana-Sorina Baltatu, executive director of the oil company, said discussions had started with Austrian oil major Petrom over the acquisition of filling stations, if the firm decides to reorganize its portfolio.

Baltatu said that NIS Petrol was aiming to double its number of filling stations to 30 this year, which would

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require an investment of around EUR 15-20 million. However, reaching a 10 percent market share means controlling over 120 stations.

“Western Romania is a priority for us because it is the closest to our refinery in Pancevo,” said Baltatu. The refinery currently supplies 10 percent of the fuel sold in Romania, while the rest is acquired locally.

Baltatu told BR that the new fuel excise of 7 eurocents, which should be implemented in April, will influence the company’s objective of reaching breakeven point this year.

“You have to consider that Romania, unlike the situation in the EU, has a very low level of excises. Romania has an accession calendar and needs to harmonize the excise level with minimum levels in the EU. We must expect this increase to be continuous.

We have taken into account, in our long-term plans, that Romania will harmonize its level of taxes, including excises, with those in the EU,” said the director.

According to data published by the European Commission in January 2014, the excise on leaded petrol in Romania stands at EUR 446 per 1,000 liters, just above the floor level of EUR 421 per 1,000 liters in the EU. The company is also seeking oil in six concessions in Romania in partnership with four international companies. ∫ Ovidiu Posirca

OM, a genuine Romanian chocolate bar that has borne the national flag on its wrapper since 1964 and has a strong rum flavor, is the best-selling local chocolate bar. The brand is easily recognized by consumers, and is available in most stores, from small neighborhood shops to hypermarket chains, enjoying the best distribution in Romania. Over 30 million ROM chocolate bars were sold nationwide in 2013, preserving the brand’s leadership in both modern and traditional channels. This was 20 percent up on 2012.

“The best promotion for ROM is the authentic Romanian label. This attribute belongs entirely to ROM and can’t be replicated by any foreign brand, regardless of marketing skills,” says Gabriela Munteanu, marketing manager at Kandia Dulce. ROM is also sold in countries where there are sizeable Romanian communities.

In recent years, the confectionary item has had several advertising campaigns drawing on Romanian values, such as American ROM (2011), Romanians are Smart (Romanii sunt destepti,

In the 2011 campaign, the traditional Romanian flag wrapper was replaced by the American stars and stripes

2012), Bucharest not Budapest (2013) and Revenge is Sweet (Razbunarea e Dulce, 2013), which have won McCann advertising agency international advertising awards for creativity and implementation. The American ROM campaign of 2011 received no fewer than nine awards at Cannes Lions 2011, including two grand prix.

BR will continue to put the spotlight on some of the iconic Romanian brands that are promoted worldwide. ∫ Oana Vasiliu

www.business-review.eu Business Review | March 10 - 16, 2014

6 INTERVIEW

AFI Europe Romania speeds up growth, looks to expand into residential Finishing two more AFI Park office buildings, starting the construction of the remaining two and opening a cinema multiplex and entertainment area in AFI Palace Ploiesti are the main tasks on the agenda of AFI Europe Romania CEO, David Hay, this year. Confident and optimistic about the market’s rebound and ongoing potential, the real estate developer and investor is also looking at buying land for more retail projects and is getting ready to invest in residential, Hay told BR. ∫ SIMONA BAZAVAN

CV David Hay

How do you see the real estate market evolving this year and do you think there will be any significant changes?

A lot depends on the general situation of the economy. According to pundits, this year should be better than last year. The psychological effect of this and its effect on people and on the market are also important. If we see improvement in Europe and improvement in Romania, this will influence the real estate market. Also, one of the major things that need to be improved in order for the real estate market to bounce back is the issue of the financing and the availability of bank financing. This is again important, but it remains difficult. It is not easy but I hope that this year will mark a change.

With over 20 years of experience in international real estate development and management in Europe, the US and Africa, Hay has been with AFI Europe since 2006 when he joined the company as business development manager. Three years later he was appointed CEO of AFI Europe Czech Republic, Poland and Germany, Hungary and Latvia, and in January 2011, he became CEO of AFI Europe Romania, Latvia and Hungary.

Hay previously worked as the GM of a high-end residential development in Lagos, Nigeria, and as VP of real estate development and management company Hail Holdings. He graduated from Buckingham University in the UK with an LLB & LLM.

Are there signs that this is improving?

I see some change in the banks’ attitude. I cannot say this is the beginning of a trend but I feel something is beginning to change and I hope that it will change this year because this will allow more projects to be developed.

It will remain limited, meaning that it will not be available to all developers or for all projects, but nevertheless it will be more available than before.

Courtesy of AFI Europe Romania

What sort of real estate projects are most likely to secure financing right now?

I think that office projects with a good prelease rate, a good location and a good developer remain the best candidates for financing in the eyes of banks.

What about financing for the two AFI Park office buildings you will finish this year?

We haven’t signed it yet. The second building is financed 100 percent from our equity and we estimate that we will secure the investment loan for this second building and the development loan for the third building next month (e.n. in March) or the month after, at the latest. Let’s say banks are giving today 65 to 70 percent loan-tovalue or loan-to-cost. These are the terms in general. I cannot give you more details, but the first building cost approximately EUR 20 million.

What is the prelease rate of these office buildings?

Building number two is 100 percent leased to Electronic Arts and 40 percent of building number three is leased to Endava. We are currently negotiating an additional 20 to 30 percent prerelease to another company.

So is it mainly IT companies driving demand at present?

Yes, in the office segment we’re seeing more interest from IT companies but also from BPOs. They have almost

exhausted Poland and Romania is next in line. We’re seeing a lot of interest from BPOs in large surfaces and I’m talking 3,000 to 6,000 sqm. In Romania there is still a lot of available office space for them and the workforce in Romania I think is even better than in Poland. This is something that I have said many times before – Romania’s young generation is very, very professional, well educated, very hardworking and with good language skills. We will definitely see more BPOs entering the market this

year and also a greater number of IT companies. There will be newcomers but also the expansion of existing players.

This will drive up activity on the office segment. And there are new projects being developed. We are coming with buildings number two and number three of AFI Park, we are starting building four and other developers, especially in the Barbu Vacarescu area, are delivering office space this year.

Any signs of saturation?

No. There is demand, coming especially from IT companies and BPOs – newcomers and the expansion of existing players – as I said. A good example is Electronic Arts which has expanded to 12,000 sqm, which is a lot. Yes, there is room for more office buildings.

If you look at the vacancy rates by area, you will see that rates of about 16 percent are really limited to Pipera and class B buildings. If we look at class A office projects in this area (e.n. center-west Bucharest) or Barbu Vacarescu, the vacancy here drops to around 4 percent. So it depends on the location and type of building. If you are developing a project in a good

www.business-review.eu Business Review | March 10 - 16, 2014 location and it is a class A building, there will be tenants.

When will you complete AFI Park and what will come next on the office segment?

We will hopefully start buildings four and five next month (e.n. in March) and these will be delivered in Q3 or Q4 of 2015.

Then we will start AFI Business Park which is opposite Vulcan. We hope to get all the permits by the end of this year because we have changed the concept, and we hope to start the first building at the beginning of next year. It will have around 16,000 sqm GLA and could be finished by mid2016. AFI Business Park will be built in three phases, each of about 16,000 sqm GLA. When will we finish it? If you had asked in 2011, when we started AFI Park, when we would finish that, I would have said later than we actually did. If we continue in the same rhythm, I will be satisfied.

We are very satisfied with AFI Park.

It is a great project even though before we started it, people said there was nothing here. All the activity was in Barbu Vacarescu and Pipera, not in the center-west. But we believed in it, we saw the potential and we managed to bring companies here by giving them the right product in the right location. We hope that we will be wise enough to do the same with AFI Business Park.

Are you focusing on office right now?

What about retail developments?

We are not abandoning retail, not at all. On the contrary, we have two projects that we need to develop. One is AFI Palace B. Noi and the other is the AFI Palace Arad retail park. We need to develop them, we believe these are good projects and we are very optimistic we will start construction this year. It depends on many factors – financing, leasing, and permitting.

Last year we opened AFI Palace Ploiesti and we are very happy with the results. In April we plan to open a Cinema City multiplex there and also an entertainment area. We are also looking to start new retail projects, both in Bucharest and outside. We hope to close at least one deal to buy land for such a development this year.

What will AFI Europe’s next Bucharest mall look like?

It will not be as large as AFI Palace Cotroceni but larger than AFI Palace B. Noi. I can’t give details about the location. What I can tell you is that it will not be near projects such as Mega Mall or ParkLake.

What cities are you considering outside the capital?

We are looking at one of the big secondary cities. This is what I can tell you for now. Some of them still have potential for retail developments. We

INTERVIEW 7 hope to close one deal to buy land to develop a shopping mall outside Bucharest in one of these cities.

Is it a good time to buy land? By how much have prices dropped?

Yes, it is a good time to buy. As for prices, it depends. Many land owners who bought before the crisis are still very hesitant to sell unless they are pressed by banks. Prices have gone down by 10, 20 percent, in some cases 30 percent, but not by more, especially when we are talking about good locations. A good location is one of the key ingredients in developing a successful shopping mall.

What about residential developments?

It is in the cards. Not for the next year, for sure, but the market will change.

We see this and we are getting ready for when it does.

It could take one, two or three years, but it will change. Right now the demand is, let’s say, only for apartments that qualify for the Prima Casa scheme. We’re hardly seeing any sales outside of this. The market will move past this when people feel more secure and are ready to take risks.

We have enough land for residential developments in our portfolio in Bucharest. We are working on the concept and the permitting but I cannot give you a clear timeline for this.

We target the mid-market – two- and three-room apartments – but we plan to offer above average standards. It will be a large-scale development of at least a few hundred residential units developed as an integrated concept.

Any plans to sell any of your local assets?

No, but you never say never. If someone comes and offers an excellent price, we will consider it. But we are not in the market and we are not looking for buyers. From time to time there are approaches from players who are not presently on the market.

Generally speaking, there is interest from large international private equity funds. It started last year and continues this year. Last year we didn’t see any deal apart from NEPI, but they for me are like local investors.

I hope that this year will see a deal involving one of these big international players. This is very important for players in the office and retail market.

What can you tell us about the results reported by AFI Palace Cotroceni in 2013?

The final numbers are not yet out but we continued to grow. Al indicators went up. We are very happy with the project. We opened it at the height of the crisis but it has performed very well. The target is to improve it even further. We have changed the tenant mix a lot over the years and more changes lie ahead. simona.bazavan@business-review.ro

www.business-review.eu Business Review | March 10 - 16, 2014

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BR Awards 2014: change, entrepreneurship and risk-taking The winners of the 2014 Business Review Awards received their prizes last week in a ceremony that gathered representatives of top local and international companies as well as representatives of the international community present in Bucharest.

BR AWARDS 2014 WINNERS SUSTAINABLE BUSINESS PRACTICES HOLCIM ROMANIA ONLINE STRATEGY FOR BUSINESS DEVELOPMENT eMAG INNOVATION IN TECHNOLOGY MB TELECOM BEST START-UP SUPPORTER JUNIOR ACHIEVEMENT ROMANIA BEST FINANCING FOR SME & START UP BANCA TRANSILVANIA

Photo: Doru Oprisan

BR Awards 2014 winners: (left to right) Xavier Piesvaux, Mega Image; Anca Oreviceanu, Renault Romania; Mircea Tudor, MB Telecom; Stefania Popp, Junior Achievement Romania; Felix Patrascanu, FAN Courier; Alina Cristea, Holcim; Vasile Carstea, Romgaz; Amalia Buliga, Diverta; Ecaterina Ion, HP; Dragos Ungureanu, Banca Transilvania; Iulian Stanciu, eMag

∫ BR TEAM “In 2013 we got the courage and confidence to act. You were entrepreneurial, you took more risks and in exchange made bigger profits,” said Ilinca Paun, managing director of Colliers Romania and president of the BR Awards 2014 jury, introducing the ninth edition of the ceremony.

The gala evening opened with the award for Sustainable Business Practices, won by Holcim for the EUR 15 million waste recovery installation in its cement factory in Alesd. “Sustainability is at the center of our organization and it is very important for us. Sustainability is a very used word these days(…) It is about the economic, the social and the environmental,” said Alina Cristea, sustainable development manager of Holcim.

Picking up the award for Online Strategy for Business Development, Iulian Stanciu, general manager of eMag, announced that the company had ambitious plans.

Banca Transilvania collected the “We were a little bit noisy at the end of the year with Black Friday. I hope award for the Best Financing Program this year we will be less noisy and we for SMEs and Start-ups, having granted in excess of 18,500 new loans will do more,” said Stanciu.

The Innovation in Technology ac- to SMEs in 2013.

HP took home the gong for Best colade was given to MB Telecom for the Roboscan Aeria, an aircraft X-ray Employment Initiative. “We would scanner. Commenting on the awards like to continue to drive performance, the firm has received internationally, passion and innovation at HP,” comMircea Tudor, president of the com- mented Ecaterina Ion, the company’s pany, said, “To be awarded in our HR director for Romania and SEE. 8A newly introduced award, for country is ten times more valuable than any other prize outside of Roma- Best Turnaround Strategy, went to Dinia.” He added that MB Telecom had verta. The Romanian book and stabeen invited by the government of tionary retailer broke even in 2013 Switzerland to open a factory there. and exited insolvency. Amalia Buliga, The Best Start-up Supporter award CEO of Diverta, said the company was went to Junior Achievement Romania, hoping to start growing its brand and a top provider of entrepreneurship “keep it relevant in people’s minds.”

Felix Patrascanu, managing direcand economic education programs, reaching 180,000 students. Stefania tor of delivery company FAN Courier, Popp, CEO of the NGO, alluded to a was named Entrepreneur of the Year. quote by French author Antoine de Thanking his two partners and the Saint-Exupery to highlight the vision friends who gave him financial supentrepreneurs need: “A rock pile port at the company’s beginning in ceases to be a rock pile the moment a 1998, he commented that he “never single man contemplates it, bearing imagined we would get this far in within him the image of a cathedral.” such a short time.” Since its establish-

BEST TURNAROUND STRATEGY DIVERTA BEST EMPLOYMENT INITIATIVE HP GEBOC ENTREPRENEUR OF THE YEAR FELIX PĂTRĂŞCANU FAN COURIER DEAL OF THE YEAR ROMGAZ – IPO BUSINESS LEADER OF THE YEAR XAVIER PIESVAUX MEGA IMAGE EXCELLENCE IN BUSINESS DACIA ment 15 years ago, over EUR 20 million has been invested in FAN Courier and the company has grown to reach national coverage.

Xavier Piesvaux, general manager of retailer Mega Image, won the Business Leader of the Year prize. “Delhaize has given us a free hand to have our own strategy in Romania. […] We have ambitious plans for 2014. The expansion is just the visible part of our strategy and there are many other challenges in this tough market,” he said. Mega Image opened a total of 104 stores nationwide last year, giving it a network of 296 locations.

The Deal of the Year award, which was contested by players from the fi-

www.business-review.eu Business Review | March 10 - 16, 2014

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1. Jury members Gerard Chandran, GM Mondelez International and Mihai Marcu, president of the administration board, MedLife 2. Steven van Groningen, president and CEO of Raiffeisen Bank Romania and Mircea Tudor, president of MB Telecom 3. Arnulf Gressel, commercial attache at the Austrian Embassy in Bucharest (left), Neil Swain, senior trade commissioner at the Embassy of Canada to Romania.

4. Ilinca Paun, managing director of Colliers Romania 5. Catalina Stan, CEO of BDR Associates and Xavier Piesvaux, general manager Mega Image 6. Sandra Diviskova of CEO Clubs, Gerard Chandran and Mamas Koutsoyiannis, managing director of Baker Tilly 7. Princess Marina Sturdza and Christophe Weller, managing partner of COS 8. Master of ceremonies Colin Lovering, managing director Achieve International

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for Excellence in Business. “In a county that often awards prizes rather frivolously, often as a marketing gimmick, these particular awards stand out for their integrity and authenticity. (…) I hope that everyone present here tonight will come away with a sense of achievement and pride,” said Marina Sturdza.

Rounding off the night, the Excellence in Business award was presented to carmaker Dacia. “This prize goes to 17,000 people in Romania who work every day to design, produce and deliver Dacias in Romania,” said Anca Oreviceanu, communications director at Renault Romania.

Photo: Silviu Pal

nancial services and IT sectors, was taken home by Romgaz, for what was the biggest IPO in Romania, raising EUR 391 million through the sale of a 15 percent stake in the state-owned company. “In the last year, Romgaz has played an important part on the Romanian capital market, contributing through its stock exchange listing to the favorable evolution of a transparent and dynamic business environment, which will strengthen the potential of Romanian companies in relation to investors,” said Vasile Carstea, director at Romgaz.

Princess Marina Sturdza, patron of many charities, presented the award

www.business-review.eu Business Review | March 10 - 16, 2014

10 FOCUS

Local crowdfunding scene gives entrepreneurs strength in numbers Crowdfunding is entering the mainstream as a way of raising funds in the United States, while in Europe it is still gaining a foothold. Romania, meanwhile, is pretty late to the party, but already has a handful of crowdfunding platforms and has seen some initial attempts to secure money for projects. tions & social affairs at Petrom, tells BR. She adds that some projects have managed to raise funds in Romania, An entrepreneur or NGO who believes proving the model works. “There are in their project may be well-advised to platforms that do crowdfunding at a take the untrod path and look else- professional level, which provide adwhere for financing, away from the tra- vice for initiators from experts with a ditional models offered by banks, fundraising background abroad, where venture capital, or even business angels this phenomenon is much more developed. More and more projects are reor the average donation campaign.

“Crowdfunding is not yet frequently sorting to this financing option. All the used in Romania, and Kickstarter, the ingredients are in place for crowdfundmost popular crowdfunding platform in ing to be successful locally. But the dethe US, cannot yet be used legally from ciding variable is the quality of the here. Even so, there are a few success proposals that aim to attract support stories where people have managed to from the public,” adds Nicolici.

Blogger Andrei Cismaru (www.anfinance their activity via crowdfunding.

An example is FaceRig, a Romanian dreicismaru.ro/) tells BR that credibility start-up which carried out a crowd- is probably the most important ingredifunding campaign using Indiegogo and ent, since not only in crowdfunding, but managed to raise over USD 300,000, also in other domains, the lack of it can even though its initial target was USD doom a project.

One project that got money using 120,000,” Bogdan Iordache, CEO of How crowdfunding is Making Waves, a festiTo Web, tells BR. Apart from Kickstarter and In- val showcasing New Romanian Cinema diegogo, other platforms have made a organized by the Film Society of Lincoln splash, such as the business-dedicated Center, Jacob Burns Film Center and the Crowdfunder, which offers a blend of Romanian Film Initiative, in collaboradonation-based and investment crowd- tion with the Transylvania International funding from individuals and angel in- Film Festival. It is the only comprehenvestors, and Crowdrise, a platform for sive US festival dedicated to showcasing donation-based funding for good and celebrating the best of Romanian contemporary cinema as well as rarely causes and charity.

“I strongly believe crowdfunding can seen classics. Crowdfunding conbe the answer for startups in the future tributed to making that happen.

“In Europe, the crowdfunding model because such a campaign allows one to test the idea; and the more money the has just appeared. Crowdfunding is sucfuture consumer offers in advance to cessful only in the United States for now. build the product/service, the greater (…) We have organized campaigns twice, the validation. In this case, the value of and each time we managed to raise a crowdfunding campaign does not lie around USD 20,000, representing one so much in the sum that can be raised fifth of the total sum we needed for but in the feedback the entrepreneur re- Making Waves,” Corina Suteu, president ceives,” blogger Andrei Crivat (www.an- of the festival, tells BR. “Many social projects dedicated to dreicrivat.ro/) tells BR. Romania too can boast a few children, the elderly or the underprivilocal crowdfunding platforms of leged will find it easier to benefit from its own, such as crestemidei.ro, multifi- crowdfunding. They carry a heavy emotional charge, that’s why. But Kicknantare.ro and wearehere.ro.

“Crowdfunding is still in its infancy in starter, the platform we used, addresses Romania. Our experience with Tara lui exclusively creative projects and has beAndrei has convinced us of the power of come an essential fundraising interface initiatives that manage to coagulate for independent film in the USA,” adds communities around them. (…) It all Suteu.

Basically, there are two main types starts from proactive people who believe unconditionally in an idea and are of crowdfunding. The first is donationwilling to invest time and energy in it; based, where funders give in return for they are then joined by volunteers or products, perks or rewards.

The second and more recent model supporters who disseminate information on the project among their circles. is investment crowdfunding, where They are all equally important for businesses seeking capital sell ownerthe success of a project but also for ship stakes online in the form of equity obtaining financing via crowdfunding,” or debt. In this model, individuals have Mona Nicolici, head of community rela- the potential to recover their capital by

∫ OTILIA HARAGA

Photo: JULIE CUNNAH

Making Waves: actors Harry Lloyd, Luminita Gheorghiu; director Nae Caranfil

becoming owners or shareholders.

“The social and cultural domain may have adopted this method in Romania ahead of others because many project initiators in these fields are constantly looking for new ways to support their projects and dare to maintain more diversified financing sources. But as soon as we begin to understand that donations are not just for humanitarian causes, but represent a strong tool which can help us create independent journalism platforms, unique cultural happenings, and useful and accessible technology, I think we will be seeing this method used in more and more domains,” says Crivat.

According to Oana Man, co-founder of crestemidei.ro, ”One of the major challenges is to do away with the association between crowdfunding and begging. We must all understand that small donations contribute to making unique projects that generate value and have a positive impact in the community. We are not talking about giving money ”out of charity” or ”for free” but to support innovation and creativity. Another challenge is the identify the projects, it seems there are not so many outside the creative sphere. ”Technical or research projects are more ample, more rigorous, less accessible to the average individual and they usually benefit more easily of conventional financing. In spite of these, on crestemidei.ro, at the end of 2013 a submarine robot was financed at the end of 2013, which was a technical project,” she says.

Suteu points out that a campaign

should include a presentation film and have a very well-thought out system of rewards, while the money must be sought for a very clear purpose.

Throughout the campaign, there must be constant communication with potential donors and information must be transmitted in a tailored and consistent manner. Also, the rewards must be very tempting, advises Suteu.

“We carried out the project using our database, but especially via social media, personal conversations, and tireless lobbying of friends, partners and acquaintances,” she tells BR. Cismaru recommends thorough knowledge of the target audience. , “Choose the public to whom you are communicating your project and your needs. You must take into consideration the interests and profile of the people whom you are targeting,” he says.

But, as in any pitch or competition, there are winners and losers, and the difference may be not in the value of the project but in the way it tells its story.

“The success of a fundraising campaign depends to a great extent on the story it tells: about its initiators, their courage to change the world, and those who are joining and contributing. The story of a platform must be conceived in the same tone, bringing added value to each project that is being presented,” says Crivat.

He points out that the story must be told “plainly and clearly,” the funds must be used in a transparent manner, reporting constantly to those who contributed and involving them in making

www.business-review.eu Business Review | March 10 - 16, 2014

FOCUS 11

Photo: GODLIS

Staff, volunteers, guests and audience members at the opening of Making Waves

the project in as original a manner as possible.

“Last but not least, a great deal of enthusiasm is needed from the fundraising team – sometimes you must get over 99 rejections before receiving one contribution, but this will not change the value you create with your work at all,” says Crivat.

He tells BR that for some time, he has been seriously entertaining the idea of developing the Prin Transilvania project through crowdfunding on the crestemidei.ro platform. “crestemidei.ro has had local successes, such as financing a campaign in 24 hours and keeping the financing rate of the projects at over 50 percent. A lot of very fine projects have managed to find financing rapidly on crestemidei.ro, which I believe is due to the total involvement of the team behind the platform,” says Crivat.

Crestemidei.ro has so far hosted 20 campaigns, 18 of which have closed and two are ongoing. Of the 18 completed campaigns, nine were fully financed, one received sponsorship and was taken over by a private company, and nine were not fully financed. Out of the campaigns that were fully financed, seven have finished and two are being implemented. The value of the financed campaigns exceeds EUR 13,000.

“It helped a lot that we were the only crowdfunding platform in the world that launched via a crowdfunding campaign with 42 supporters who were honorary members of the website,” Oana Man, co-founder of crestemidei.ro, tells BR. One project that is currently seeking funds on the site is Volunteers Fest, a festival which aims to promote volunteering among young people in Romania.

“We chose crowdfunding because we believe it is a creative initiative and offers us the opportunity to observe the reaction of those around to such a project but also their involvement in the personal, and especially professional, development of our generation,” Alexandra Burdulea, PR manager of Volunteers Fest, tells BR.

For this edition, Volunteers Fest, which will take place between March 24 and April 6, will be trying to raise RON 2,000.

Crowdfunding platform PotSiEu.ro, started in June 2013, has initiated seven campaigns, out of which three were fully financed.

“We started from a formal community that formed around the team at The Hub Bucharest who were also our godfathers – in this space the team of founders was formed and started working – to which we added a community of friends and acquaintances, so at the launch the space was packed,” Catalina Azamfirei, solutions creator of the PotSiEu.ro platform, tells BR. PotSiEu.ro managed to raise funds for projects such as Iurta calatoare, which attracted RON 5,196, the Intrarea Violoncelului campaign (RON 7,638) and the campaign Ba Se Poate! (RON 29,520).

In total, PotSiEu.ro has raised over RON 42,300. “The first two campaigns were implemented from last year while the third, which covered part of the production costs of the film with the same name, proved there is a community interested in finding out through film how to improve the education process through coaching,” says Azamfirei.

The average value of a donation on PotSiEu.ro was around RON 80-100.

The campaigns that had an exit mainly offered services to do with starting a social business.

“This way of mobilizing funds is influenced greatly by the financial power of the supporters and consequently, in the consultancy we offer interested parties, we suggest they take into consideration that the success of a project also depends on the lack of maturity of the market. A campaign in the technical domain requires a much higher initial capital and naturally a corresponding number of supporters, and on the other hand it must propose something that is attractive enough for people with extremely diverse interests,” Azamfirei tells BR. otilia.haraga@business-review.ro

www.business-review.eu Business Review | March 10 - 16, 2014

12 FOCUS

Hidroelectrica’s return to insolvency shatters stock exchange ambitions With Hidroelectrica, the state-owned hydropower producer, sent back into insolvency at the end of February, unnerving lenders with EUR 400 million in receivables, any listing prospects depend on the company’s ability to exit insolvency in good shape, say experts.

Challengers of Hidroelectrica’s closed insolvency

∫ OVIDIU POSIRCA The Bucharest Court of Appeal decided on February 25 to annull the official conclusion of the judicial reorganization of Hidroelectrica that was approved in June 2013. Judges sent the case back to the syndic judge for a retrial, following appeals by the company’s creditors, including the energy traders known as the “wise guys.” These were companies that secured long-term supply contracts at low prices, which were disadvantageous to the power producer.

Remus Borza, who represents insolvency manager Euro Insol, was reinstated as judicial administrator of the company, while Gabriel Dumitrascu, general manager of the privatization division and administrator of state stakes in the energy sector, was appointed special administrator.

“Restructuring measures have been taken and I think that Borza has done a good job. From my point of view, the contracts left unclarified with the ‘wise guys’ in the energy sector brought about this return to insolvency (…) It is clear that things have slipped out of control once again. I think the activity of this company needs to be more stringently monitored,” Constantin Coman, country manager at Coface Romania, the credit insurer, told BR.

Insolvency outcome crucial for listing Dumitrascu said the power producer would be “swiftly removed” from insolvency and that its portfolio would be restructured. He added that the company would be prepared for listing but did not provide a timeline for this target.

12 the number of Hidroelectrica’s bank creditors

EUR 400 mln amount of bank receivables

EUR 200 mln Hidroelectrica’s profit in 2013

Alpiq Romenergie Alpiq Romindustries Energy Holding EFT AG EFT Romania Andritz Hydro 2nd District Local Budget Department

Source: Property Fund Remus Borza judicial administrator Hidroelectrica

Constantin Coman country manager, Coface Romania

The government had pledged to list a 15 percent stake in the company on the Bucharest Stock Exchange this June, as part of the EUR 4 billion stand-by agreement with the IMF and the European Commission, the executive arm of the EU. At present, the government controls an 80 percent stake in Hidroelectrica, while the Property Fund, the EUR 3.3 billion closed-end fund managed by Franklin Templeton, holds the rest.

The state is expected to raise as much as EUR 330 million from the sale of its stake in the producer, which currently covers around one third of Romania’s electricity consumption.

“A reasonable time has to pass after the company exits insolvency before we talk about a potential listing. Until it becomes clear what will happen there and how long it will remain in insolvency, and even more importantly in what condition it will exit insolvency, we cannot yet consider a potential listing,” Dumitru Beze, chairman of the Association of Capital Market Investors (AIPC), told BR. The producer exited its first period of insolvency after one year.

Remus Vulpescu, the former special administrator of Hidroelectrica, who also sat on its supervisory board, commented that the firm may end up paying at least EUR 300 million in penalties to the energy traders, in an extreme scenario under which the traders would have their cheap energy supply contracts reinstated.

Beze said the company would be interesting to potential investors only if it came with no massive debts or penalties.

During his tenure as judicial administrator, Borza denounced a handful of

bilateral contracts with the “wise guys”, including Swiss Alpiq and Romanian Energy Holding. He said these contracts had deprived the state company of around EUR 1.2 billion over six years.

Borza stated that last year the producer registered a record profit of EUR 200 million and EUR 665 million in turnover.

According to Ludwik Sobolewski, CEO of the Bucharest Stock Exchange (BVB), there is “little probability” of an IPO this year. A consortium comprising Raiffeisen Capital & Investment and Morgan Stanley was selected in late January to manage the initial public offering (IPO) in Hidroelectrica.

Banks face provisioning conundrum Vulpescu said last week in a broadcast appearance at gandul.info that banks have receivables worth EUR 400 million in the power producer and that lenders can provision them, under new IFRS rules rolled out in 2013.

“In 2012, banks did not make provisions or were not fully provisioned and they had not deducted the receivables they had in Hidroelectrica from the taxable profit,” said Vulpescu. This legal provision saw the profit tax collected from banks drop by EUR 1 billion last year.

Beze said the central bank’s move was “totally incoherent”, and “with no legal grounds was trying to avoid blowing up the banking system” as these sums were not provisioned. In 2012, the central bank issued a derogation that saved banks from provisioning their receivables in Hidroelectrica, according to independent news portal cursdeguvernare.ro

Borza told Mediafax newswire on February 28 that the appeal for annulment would be used to get the company out of insolvency, but only after judges issued a motivation for their decision.

“We will appeal for annulment at the Court of Appeal; it is the option that can be used by creditors. They were not cited by the Court of Appeal on the Tuesday meeting (e.n. February 25).

Hidroelectrica’s real creditors are 12 banks, which, however, were not cited.

The court said their citation was not necessary,” said Borza.

Energy experts reckon the insolvency threatens Hidroelectrica’s capacity to attract financing for new investments. The biggest planned project is the EUR 1.2 billion hydro pumping storage plant at Tarnita Lapustesti. So far, the authorities have unsuccessfully attempted to attract international investors that have enough financial clout to build it.

Constantin Nita, the former delegate minister for energy, said last month that a spin-off, especially of the inefficient investments, would “be great”.

“Imagine that Hidroelectrica, over the years, has made investments of several hundred million euros that did not generate any income, meaning we have buried some money and it will stay there,” said Nita.

Coman of Coface Romania says that an insolvent company has limited financing options. It could seek help from banks, which are not that receptive, or from suppliers that trust it.

Finding an investor might also work but the manager says there have been few situations in which insolvent firms have been able to attract fresh investments. ovidiu.posirca@business-review.ro

www.business-review.eu Business Review | March 10 - 16, 2014

SOCIAL RESPONSIBILITY 13

NGO makes IT happen for vulnerable workers Disadvantaged Bucharest jobseekers can access advice and professional retraining at Atelier fara Frontiere (Workshops without Borders), a NGO aiming to fight exclusion, help protect the environment and promote solidarity.

OANA VASILIU

Courtesy of Atelier fara Frontiere

The NGO collects old IT equipment from companies, such as computers, printers, desktops as well as street banners, which are reconditioned or recycled in its workshop by a staff of vulnerable workers.

In 2008, the NGO started its IT department with international financial support. The Chambre de Commerce, d’Industrie et d’Agriculture Francaise en Roumanie (CCIFER) presented the NGO and its activities to its members, and as a result the organization raised the funds to give vulnerable individuals employment opportunities in its workshop. In 2012, 44 such workers were employed at Ateliere fara Frontiere, rising to 49 in 2013. Currently, 20 people are working there.

So far, 4,373 computers have been donated through the Assoclic program to 771 institutions nationwide, which are used by almost 90,000 beneficiaries, according to completed questionnaires received by the NGO. “This is how we show our staff that the work they are

Computing community spirit: an alternative for disadvantaged jobseekers

doing eight hours per day is extremely important for another vulnerable group, those who can’t afford a computer at home or at school,” says Patrick Ouriaghli, executive director of Atelier fara Frontiere.

“At this workshop, we have workers from 18 to 63 years old. They come

mostly from our partners such as Mobile Emergency Service Help Romania (known as Samusocial), the Concordia Association, Probation Service, General Directorate of Social Assistance and Child Protection (DGASPC), and other NGOs who work with vulnerable individuals,” says Ouriaghli. Personnel can

spend two years at the workshop, during which they are given retraining for a domain that they like or are familiar with. The NGO also helps them find a job, providing study, qualification and accreditation opportunities.

IT equipment recycling is just one of the activities performed in the workshop. “We try to develop our workshop in as many directions as we can, which is why we started the sewing service.

Apparently, recycled street banners are very fashionable nowadays, so we transform them into bags, card holders, paper folders or anything our clients want,” adds Ouriaghli. The recycled bags are available in the Carrefour hypermarket chain for RON 14.9.

Of great help are the companies that already know what Atelier fara Frontiere does and which contact them to pick up their own street banners. This is a type of social responsibility that any company could consider, as the current national legislation doesn’t require advertisers to retrieve their street banners after use. oana.vasiliu@business-review.ro

www.business-review.eu Business Review | March 10 - 16, 2014

14 CITY / HR FILM REVIEW

WHO’S NEWS BR welcomes information for Who’s News.

Submissions may be edited for length and clarity.

Get in touch at simona.bazavan@business-review.ro

Ravinder Takkar

45, will become head of Vodafone Romania in May. He is replacing Inaki Berroeta, who is taking over at Vodafone Australia. Takkar had served as CEO of Vodafone Partner Markets since January 2012. Takkar, an American citizen of Indian origin, is an IT graduate from the Loyola Marymount University in Los Angeles. He will move to Romania with his family, according to the telecom operator.

Takkar joined the company in 1994 and has worked in many executive positions, both in Vodafone Group and in other joint venture type companies. He is a member of the Vodafone India directorate.

Alexandra Copos

the daughter of local businessman George Copos, will take over as president-general director of Athenee Palace, the company that owns the Athenee Palace Hilton Hotel in Bucharest. The move comes after the businessman was convicted and jailed last week for his involvement in the ‘Transfer File’ tax evasion case.

She previously served as the VP of the administration board.

Victor Armaselu

43, has been appointed director of the consumer electronics division of Samsung Electronics Romania.

He previously coordinated the firm’s audio-video products department.

Before joining the company, Armaselu gained experience in sales & distribution, key account management, trade marketing and customer relations. Over the years he has held top management positions and entrepreneurship roles in various companies such as Loctite regional manager for Henkel Romania, corporate

sales director for the Volvo Cars importer, sales director, trade marketing director, sales vice-president, distribution & trade marketing with SABMiller (Ursus Breweries). He has also provided management consultancy as an entrepreneur.

Loredana Ralea

has joined Clifford Chance Badea, the law firm has announced. Her appointment took place this March.

With over 15 years of experience with international law firms, she specializes in corporate and commercial law. Ralea has a background in mergers and acquisitions, corporate governance, employment law consultancy, financial institutions and the insurance regulatory area.

Over the years she has advised on M&A transactions, and on the dayto-day operations of clients in industries such as banking & finance, consumer business, energy and leisure. Ralea graduated from Law School in 1994 and is a member of the Bucharest Bar Association.

Mircea Alex Dascalu

is the new executive director of the Netherlands-Romanian Chamber of Commerce (NRCC). He has been managing partner for Greenfield Management Consult since 2007, and has also held top management positions for Vital Business Development & Consulting and the German Union of Small and Medium-sized Companies.

Anna Heijker

has been appointed communications manager of the NRCC. She has solid experience in developing marketing and communications strategies. She holds a master’s degree in the Dutch Language. Heijker has been living in Romania since October 2012. She has established her own business providing training and consultancy in communications.

FOUNDING EDITOR Bill Avery PUBLISHER Anca Ionita EDITOR-IN-CHIEF Simona Fodor JOURNALISTS Otilia Haraga - senior journalist, Simona Bazavan, Ovidiu Posirca, Oana Vasiliu COPY EDITOR Debbie Stowe PHOTO EDITOR: Mihai Constantineanu

ISSN No. 1453 - 729X

The Broken Circle Breakdown

LAYOUT Beatrice Gheorghiu ART DIRECTOR Alexandru Oriean

Broken dreams: Johan Heldenbergh and Veerle Baetens as a free-spirited couple

DEBBIE STOWE Director: Felix Van Groeningen Starring: Johan Heldenbergh, Veerle Baetens On at: NCRR, Cinema Elvira Popescu Bluegrass and broken hearts drive this Belgian tear-jerker, which doesn’t so much tug at your heartstrings as throttle you into weeping submission with them. Take tissues. It is a story of love and loss, how the latter erodes the former when a terrible event befalls a freespirited couple. It changes not only the characters, but the cinematography.

While the early days of romance are bathed in golden light, later scenes of pain and discord are shot in a harsh, “morning-after” grey.

The stylistic demarcation is required because the action does not unfold chronologically, but jumps back and forth, so scenes of shock and suffering might be followed by the honeymoon period. It is a powerful juxtaposition of now and then, joy and despair.

Although we’re in Ghent, not Hollywood, a lot about this movie is mainstream filmmaking. Those kids got soul, man! We know because Didier (Johan Heldenbergh) is a wannabe cowboy and beardy bluegrass musician and Elise (Veerle Baetens) is an inked-up bo-

EXECUTIVE DIRECTOR George Moise SALES & EVENTS DIRECTOR Oana Molodoi SALES & EVENTS Sales managers: Ana-Maria Nedelcu, Oana Albu, Raluca Comanescu Sales executives: Ana Maria Andrei MARKETING Ana-Maria Stanca, Catalina Costiuc, Iulia Mizgan PRODUCTION Dan Mitroi DISTRIBUTION Eugen Musat

hemian tattoo artist. But pre-tragedy, Didier and Elise are a little bit too cute to be plausible. In its happy scenes, the movie makes you want to abandon your career and become a Belgian bluegrass musician, and it’s not often you say that.

Of course, this makes it all the more affecting when tragedy strikes. And director Felix Van Groeningen doesn’t spare his viewers: Didier and Elise suffer and so will you. I told you to take tissues.

There’s a bit of politics and religion in the mix, but anyone sniffing around the foreign-language Oscar nominees (it lost out to The Great Beauty) is likely to be firmly on board with the message.

Let’s just say, The Broken Circle Breakdown is probably not going to make the Bush family’s Netflix wish list.

But the main break from the sorrow is the music. As with Inside Llewyn Davis, the protagonist’s job as an instrumentalist and singer is the pretext for weaving the plot around frequent musical interludes. This is sometimes stretched beyond credulity: would a Belgian hospital really permit a fivepiece band to perform on its intensive care ward? But it’s sweet relief that those irresistible songs are there to raise our spirits before they are crushed again by the drama of this tender, moving and very effective story. debbie.stowe@business-review.ro

PUBLISHER Bloc Notes Media ADDRESS No. 10 Italiana St., 2nd floor, ap. 3 Bucharest, Romania LANDLINE Editorial: 031.040.09.32 Office: 031.040.09.31 EMAILS editorial@business-review.ro sales@business-review.ro events@business-review.ro