Tofan Seeks Investment for Danubiana
High profile Romanian businessman Gelu Tofan, head of the Tofan Group, is reportedly seeking international capital for his Danubiana tyre business, one of the country’s largest tyre manufacturers. Tofan’s hope for the Group, in administration since December 2006 as a result of debts amounting to around 17 million euros, is that once the administration process is completed a North American investment fund will come on board as a shareholder. The Tofan Group is apparently working with consultants PriceWaterhouseCoopers to negotiate a deal.
“We are still under administration, a process which should have ended in December last year. I hope I will be able to finish restructuring the business in the first quarter of this year, and that we can start investments, private funds meant to help develop Danubiana,” said Tofan.
Danubiana has focused exclusively on the production of truck, bus, agricultural and OTR tyres since the company sold its Silvania facility to Michelin in 2001, and is now the region’s last remaining producer of cross-ply tyres. Tofan reportedly believes that production of radials within Romania is not at present economically viable due to the increased cost of overheads. In addition to seeking overseas investment the businessman is exploring a handful of options to make operations more profitable, including moving production to China or Belarus. The possibility of some form of cooperative venture was also hinted at, with Turkey named as a potential location. Danubiana has not worked cooperatively with another manufacturer since Nokian Tyres terminated the agreement it had with Tofan in late 2000 following claims that the agricultural and industrial tyres produced for the Finnish company did not meet quality expectations.
The tyremaker’s fortunes continue to show room for improvement: In 2006, according to Romania’s Ministry of Finance, Danubiana posted business valued at 2.3 million euros and losses totalling 6.8 million euros. Gelu Tofan previously stated that 20 million euros is needed to reverse the company’s fortunes, and originally anticipated that Danubiana would be in a stronger financial state by mid-2007.