General Electric, the world's largest company, will turn Anglo-Norwegian heavy equipment maker Kvaerner IMGB (KIMGB) around, due to its equipment orders.
"We signed a three-year memorandum of understanding with the American group, which stipulates we will make various parts for General Electric," Roar Endung, KIMGB general manager, told Ziarul Financiar.
The General Electric officials confirmed the news. "We have been working with Kvaerner IMGB since last year and we have a three-year framework agreement, which needs certain specifications as to how big the orders will be from time to time," Dan Ionescu, General Electric Balkan area manager said.
General Electric's orders would allow, as Endung says, for an annual turnover of 20 million euros, which will enable the Romanian equipment maker to break even.
"We logged 14 million euro turnover last year and estimate to reach 18 million euros this year, so that we will reach the break-even point," Endung added.
The new orders received last year and worth more than 21 million euros - the highest level ever seen by IMGB, as Endung explains, take up 61% of the total productive capacity.
"The contract with General Electric would allow us to operate at full capacity and this way compensate the decline of the international market induced by the September 11 attacks," Endung specified.
The Anglo-Norwegian Kvaerner Group bought the controlling interests the former State Ownership Fund (SOF) held in Intreprinderea de Masini Grele Bucuresti (Heavy Equipment Plant Bucharest - IMGB) in August 1998. Kvaerner undertook to pay IMGB's debts and invest $54 million in the Bucharest-based company in three years. Kvaerner's investments in IMGB were mainly aimed at working capital and technology. The Norwegians did not manage to turn it around, though, and even intended to quit at some point.
Kvaerner was also the majority shareholder (50.96%) of Fabrica de Echipamente pentru Centrale Nucleare (Nuclear Power Station Equipment Plant - FECNE) in Bucharest, which it sold to a Tender Group-controlled company, Nuclearmontaj, last year.
General Electric bought some $50-$60 million's worth in merchandise from Romania from companies such as Imsat or Turbomecanica last year.
For instance, General Electric also concluded a $4.8 million contract with another domestic company, Transelectrica for introducing the acquisition, control and data processing system to the electrical power stations and plants co-ordinated by the National Energy Control Centre. General Electric sells several hundred billion dollars' worth throughout the entire world.
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