„Apa-Canal Chisinau” called on CMC for additional shares to paying external debts

SA „Apa-Canal Chisinau”, Chisinau’s water supplier, solicited to Chisinau Municipal Council (CMC), its single stakeholder, to initiate an additional share issuance, in order to reimburse its credit debts to the European Bank for Reconstruction and Development (EBRD). According to the economic manager of the water supply enterprise, Ion Burdila, ACC proposes to initiate an additional share issuance of 140,000 shares, in order to collect the necessary resources for paying the spring tranche of the previously taken credit from EBRD and used for re-establishing the water system of the capital. According to him, the issuance initiation is to be made as well with the aim to increase the statutory capital of the enterprise. Burdila explained that this method to obtain money is used in order to pay the spring tranche, as the enterprise got in a very difficult financial situation and, at the moment, does not have available resources. At the beginning, ACC proposed to launch an additional issuance of 500,000 shares, in order to pay EBRD tranche of 14 million lei and of the accumulated debts, as well as for improving the financial situation of the enterprise. The commission on budget, economy, finance and local public patrimony has reduced the value of the package down to 140,000 share, on the ground that purchasing half a million of shares would be a tough burden for the municipal budget. The specialized commission approved the decision draft with the proposal that the water supplier presents until 1 August solutions to settle the financial crisis. In order to acquire shares the municipality might get a bank credit, and than reimburse it from the municipal budget for 2007, taking into account the grace period of 6 months provided by the banks. The decision to purchase the shares is to be taken at the next meeting of the Municipal Council; meanwhile the Commission examines the project. In 2005, the municipality has purchased, from water supplier, share about 30 million lei, of which were reimbursed the April and October 2005 tranches of EBRD credit, of 23,9 million lei, and certain bank credits were reimbursed amounting to 6 million lei. ACC says that the main reason leading to worsening of its financial situation is the non-adjustment of the tariffs to real costs. The last time these had been approved back in 2001.. CMC is the single stakeholder of SA „Apa-Canal Chisinau” and has 5.047.451 ordinary shares.