The final bids by the three bidders on the short list approved by the Latvian government have to be submitted by April 4. Privatization agency's officials say that the loss won't affect the price offered for the shipping company, as enough information on the company was available to investors beforehand, and the losses are only "on paper."
"There are no surprises, because the information on the company's profit and loss account was included in the memorandum already sent to the potential bidders," Talis Linkaits, administrative director of the Latvian Privatization Agency, told The Baltic Times.
"Of course, it was not confirmed by auditors, and we rushed the company to complete its annual report before the privatization process so investors could take it into account," he added.
The Latvian Shipping Company's losses were caused mostly as a result of a re-evaluation of its ships. The company's profits before taxes and the re-evaluation amounted to $5.3 million, up $3.8 million from 1999, the company's management reported March 30, after the shareholders and council had approved the audited results.
The agency's director, Janis Naglis, doesn't think the losses will affect the company's privatization process. "The shipping company has worked well," Naglis told the Baltic News Service.
He said that while deciding what price to offer for the controlling stake, potential buyers of the company will look more at the company's market share rather than bookkeeping indicators.
The company's turnover last year was $178.9 million, down $12.2 million from 1999.
The losses may be explained by the re-evaluation of the company's ships. The fleet was assessed last year in line with international bookkeeping standards. After the re-evaluation the value of the ships fell by $25.5 million.
The value of the fleet has also fallen as the vessels that make up 47 percent of the company's carrying capacity have reached, or will reach in the next few years, "the end of their economic lives."
The largest losses for the shipping company last year, $10.5 million, were as a result of operations with refrigerator ships. The operational costs for this fleet were reduced by selling off the fleet's older ships.
The company's refrigerator fleet has knocked up losses of around $30 million in the last four years.
"We had to re-evaluate the ships as their market value and balance value differed catastrophically," Druvis Skulte, the Latvian Shipping Company's council chairman, told The Baltic Times.
He said that six refrigerators were taken off the balance to be sold. "They have to go for scrap," he said.
The Latvian Cabinet of Ministers has to approve a minimum price for the Latvian Shipping Company on April 10. The auction of the 68 percent stake in the company could take place on May 11.
The company ranked third in the world in transportation volumes of oil products in 1999, according to the international magazine Lloyd's List Economist.
The Latvian Shipping Company's profits from shipping operations last year amounted to $15.5 million. The greatest amount of revenue from last year - 81 percent of it - was acquired by the company's tanker fleet. In total the tanker fleet made $21.7 million. Gas carrier ships brought in a revenue of $4 million last year.
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