VILNIUS - Lithuania's power distributor Vakaru Skirstomieji Tinklai decided on Aug. 30 to reduce its authorized capital from 405.2 million litas (117.45 million euros) to 3.7 million litas and to distribute 401.5 million litas among shareholders both in cash and non-cash forms.
The company said it would reduce the nominal value of one share from 109 litas to 1 litas, which will in effect return 108 litas per share to shareholders.
As a result of the capital reduction decision, VST's minority shareholders will receive 14 million litas in cash, the company said.
VST, operator of the western half of the national power grid, is majority owned by NDX Energija, a company set up by owners of the retail giant VP Market. VST will take over NDX Energija's debts to banks to offset its obligation to pay 387.5 million litas to its majority shareholder.
Five banks have loaned 120 million euros to NDX Energija in order to help finance the acquisition of a majority stake in VST during the company's privatization late last year.
As a result, cash payments would be disbursed among small shareholders, who are not indebted to banks.
"We have opted for that way, which would prevent any speculations that someone was treated badly," Darius Nedzinskas, VST's CEO, said.
The management board intends to call another general meeting of shareholders within 60 days after the capital reduction is completed, during which shareholders will vote on an increase in the authorized capital.
Nedzinskas said earlier that the company might increase its authorized capital by around 1 billion litas from its own resources.
VST, which supplies electricity to consumers in the regions of Kaunas, Klaipeda and Siauliai, posted losses of 57.3 million litas on revenues of 674.3 million litas for 2003, according to audited financial statements.
NDX Energija purchased a 77 percent stake in VST from the state for 539.8 million litas in late 2003 and has since raised its shareholding to 96.51 percent.
The buyer pledged to invest 420 million litas in the power distribution company over five years.