According to the contract signed between Ford Motor Company and the Romanian state, the carmaker must expand its production capacities at the Automobile Craiova plant and could face a penalty of up to 28.5m euros for any breach of the contract.
Ford is obligated to pay half the purchasing price of the majority stake in Automobile Craiova (28.5m euros) to the State Asset Resolution Agency (AVAS) if it winds up or modifies the core business of the plant in Craiova in the first four years after the deal has been signed. The contract signed by Ford with the Romanian state is the first privatisation contract made public.
The US carmaker will also pay 25% of the purchasing price (14.25m euros) to the state if output is below 200,000 units at the end of the fourth year after privatisation. Ford has also pledged to make over 250,000 cars by the end of the same period.
The US firm faces another penalty (worth 28.5m euros) if the number of workers at the plant drops below 500. At present, the plant has 3,900 employees. According to the technical bid presented by Ford, the number of employees could reach 9,000 within the next four years.
By January 30, Ford and the AVAS have to meet several conditions that are related to the pre-finalisation of the deal. During this period, the AVAS has to receive confirmation from General Motors Daewoo Auto & Technology Company if the Craiova plant is to continue to supply auto parts for Daewoo cars. In addition, the AVAS must prove that it has definitely and satisfactorily dealt with the 2.65bn RON debt the customs authorities claim they are entitled to. The two sides will also have to meet other requirements for the deal to be finalised.
The US carmaker will not have the right to transfer Automobile Craiova shares, within the first four years after privatisation, without the approval of the AVAS. However, Fo
