Government considers suing Grindex shareholders over sale of the company's state-owned shares

  • 2017-02-22
  • BNS/TBT Staff

RIGA - The government considers taking two large shareholders of Latvia's Grindex pharmaceutical group to court for selling the company's state-owned shares, allegedly causing an EUR 2 million loss to the state as a result.

The government at a closed sitting today heard the Privatization Agency's (PA) report on the sale of the state-owned Grindex shares at an auction last year. The auction then sold the state-owned Grindex shares, held by the PA, for EUR 846,153.

In November 2016, Saeima members from the opposition For Latvia from the Heart (NSL) faction sent the Economics Ministry a letter in which they argued that the Grindex shares were sold at EUR 3.85 apiece, while the price should have been EUR 12.51 per share, since Grindex shareholders - the Lipmans family - were obliged to make a mandatory buyout offer. According to NSL estimates, the Lipmans family's failure to make the buyout offer led to a loss of EUR 1,903,295 to the state budget.

After today's government meeting Economics Minister Arvils Aseradens (Unity) told BNS that the Economics Ministry at the government meeting argued that the Grindex shareholders have to be sued in order to demonstrate that Latvia protects minority shareholders' rights.

"We have findings both from the Financial and Capital Market Commission (FCMC) and the Supreme Court that the Lipmans family had to make the buyout offer to the minority shareholders. As a matter of fact, the FCMC obliged the Lipmans to make the offer, which they did not do, but in the meantime, they did everything they could to avoid this obligation. The Latvian state is the loser in this case because it received at least two times less money than it was entitled to," the minister said, adding that the issue has to be put before court.

PA head Vladimirs Loginovs told BNS that if the Grindex shareholders had made the buyout offer the price of the Grindex shares would have been higher.

Asked about the size of Latvia's loss from the deal, the PA head indicated that the loss might be EUR 2 million or less.

The PA has hired lawyers to analyze the deal before deciding on the lawsuit.

"The government might sue the two largest Grindex shareholders to address the issue of the losses caused by the state," said Loginovs, adding that the lawsuit would set a precedent that would be useful to the financial market in general.

As reported, on November 8, 2016, all state-owned shares in the joint-stock pharmaceutical company Grindex, held by the Privatization Agency, were sold at auction at Nasdaq Riga stock exchange.

The auction price for Grindeks shares was EUR 3.85, and by selling its 2.29 percent stake in Grindex, the Latvian state received EUR 846,153. Demand for the Grindex shares exceeded the amount sold by 29.8 percent.

Admitted to the auction were licensed banks and investment brokerage companies that are Nasdaq Riga members.

Grindeks share capital is made up of 9,585,000 shares at the nominal value of EUR 1.4 per share.