Asset stripping at Liepajas metalurgs begins

  • 2013-07-10
  • From wire reports

BEACHED: Sergejs Zaharjins transferred assets, now hidden in a Panama-registered company.

RIGA - The most valuable properties of Liepajas metalurgs largest shareholder and council chairman Sergejs Zaharjins, which he presented to his older brother Valerijs as a gift about a month ago, have by now been locked away in another company’s share capital, and this company has itself been registered in still another Cyprus offshore company’s name, which, in turn, belongs to another offshore company registered in Panama, reports the investigative Web site

According to Latvia’s Register of Enterprises Lursoft database, Zaharjins gave his brother his villa in the Latvian coastal resort city of Jurmala, as well as three properties in Liepaja (southwestern Latvia), and one property in the coastal village of Nica (southwestern Latvia). Zaharjins said the total value of the properties was about 9 million lats (12.8 million euros), although real estate company Latio assessed the properties’ combined worth at 3 million lats.
A few days after accepting the ‘gift,’ Valerijs Zaharjins invested the properties in the share capital of his company Eurneo, assessing the properties’ value at 2.9 million lats.

According to the Lursoft database, Valerijs Zaharjins moved his shares in the company to the Cyprus-registered offshore company Itingen Limited on June 27.
Itingen, in turn, belongs to Green Limit, Inc., which is registered in Panama.
Valerijs Zaharjins has also resigned from the Itingen board, and now all matters that deal with Zaharjins’ properties require the Panama-registered company’s consent, writes.

Latvia’s Economy Ministry State Secretary Juris Puce said after a government meeting on July 2 that these counter-moves by the Liepajas metalurgs shareholders had delayed finding an investor for the company. Puce said that offers from several potential investors had been made, but that progress was being delayed by these actions of the current shareholders.

Ivars Pinkulis, associated director at financial consulting company Prudentia Advisers, hired by Liepajas metalurgs’ creditors, said that talks were under way with several investors, including ones found by Zaharjins and another Liepajas metalurgs shareholder, Kirovs Lipmans. So far, four confidential agreements have been signed with the prospective investors, but there are also other investors interested in acquiring the company, and talks are under way with these investors as well.

The government’s task force will continue to work with Liepajas metalurgs and potential investors until the legal protection process plan is submitted, on July 26.
Pinkulis said that attracting an investor for Liepajas metalurgs depended on the current shareholders’ willingness to cooperate. Liepajas metalurgs shares can only be bought from the current shareholders, he said.
Pinkulis also said that the fact that the court has arrested Zaharjins and Ilja Segals’ shares in Liepajas metalurgs would make it harder, but not impossible, to attract an investor for the company and have the company’s legal protection process plan approved.

Another Liepajas metalurgs shareholder, Ilja Segals, at the end of May presented a lavish gift to his 12-year-old son: the villa he owns in Jurmala.
Zaharjins said in a statement to the media that he regrets that the general public has got “the wrong impression” about the company’s shareholders, and emphasizes that Liepajas metalurgs shareholders have never tried to avoid responsibility and that their main goal is to save the company from bankruptcy.
In the statement Zaharjins adds that his and Segals’ “legitimate attempts to save their properties” are due to destructive activities by the third Liepajas metalurgs majority shareholder - Lipmans.

The recent developments indicate that it is impossible to do honest business in Latvia, and that Liepajas metalurgs and its 2,000 workers are now hostages in some kind of dirty campaign, says Zaharjins.
The statement says that the Economy Police decided on June 27 to freeze Liepajas metalurgs shares that belonged to Zaharjins and Segals. This decision will be appealed in the near future, but it is clear that the hard work that has continued for many months to find an investor for the company and save it from bankruptcy was in vain. “It is very regrettable that the authorities and some government members blindly do what Kirovs Lipmans tells them,” says Zaharjins.

Zaharjins also notes that he and Segals have signed an agreement with the company’s creditors, resolving to sell their shares in the company to creditors for one lat. In fact, the Economy Police want to arrest the shares that the two have already handed over to the state, he explains.

Lipmans believes that Zaharjins and Segals are not interested in rescuing the company and are deliberately attempting to bankrupt it. Lipmans says that the current management at Liepajas metalurgs has shown no interest in rescuing the company, and that all signs show that they are deliberately seeking to lead the company to bankruptcy.
“Looking at the their previous activities, it is clear that Zaharjins and Segals have not only squandered the metallurgical company’s assets, but are deliberately delaying all the processes that could help rescue the company,” Lipmans said.
He added that not only are these two shareholders delaying the rescue of the company, but are attempting to hide properties that were purchased by money squandered from the company.

“This once again shows that both Zaharjins and Segals have not for one moment thought about rescuing the company, but have only been selfishly attempting to retain the properties they own, all of which were purchased by money squandered from the company. I once again confirm that I am prepared to participate in the company’s rescue, both with my knowledge and capital,” Lipmans added.

Prime Minister Valdis Dombrovskis, commenting on the information surfacing about generous gifts of real estate that Zaharins has made to his brother, called the shareholders at LM “part of the problem, not the solution.”
“This proves once again how frivolous their attitude is toward the company. When the ‘creditors’ club’ urged the shareholders to invest in the company, they said they had no money,” the prime minister noted.