Riga Sea Lines enters throes of death

  • 2005-10-19
  • Staff and wire report
RIGA - Rigas Juras Linija (Riga Sea Lines) was dealt a seemingly fatal blow last week when its ferry was not allowed to depart Riga for Stockholm due to arrears.
Some 200 passengers who had plans to travel to Sweden on the Baltic Kristina Oct. 15 were forced to find other means to reach their destination after Rigas Pasazieru Terminalis (Riga Passenger Terminal), the ferry's port of call, refused the ferry permission to set sail until its debt to the passenger terminal was paid.

The size of the debt was not announced.

Riga Sea Lines Chairman Janis Butnors acknowledged that the company owed the passenger terminal, though he added it was not a large sum. The problem, he said, was that access to the corporate bank accounts had been blocked.

"In a lawless country one can do what one wants," Butnors was quoted as saying.

Company spokeswoman Evita Matisone said that the accounts had been arrested by court ruling on Sept. 20, since Riga Sea Lines owed 454,000 lats (646,000 euros) to Rinkis OV for fuel supplies. She said the company was now using a different fuel supplies. Still, it did not have the cash to buy fuel for the Baltic Kristina to make its scheduled run on Oct. 17.

However, the ferry operator was forced to cancel its Stockholm route two days earlier.

Matisone told the Baltic News Service that the company's liabilities were "very, very large," though she declined to specify. She did say, however, that the company had run up debts due to an unsuccessful marketing campaign that included lower fares.

The ferry's shareholders appear to have had enough. Riga Sea Port, which owns 19.72 percent of the shipper, last week decided not to partake in a capital increase since Riga International Arbitration Court had ruled in favor of Parex Bank over a $7.7 million loan issued for the purchase of the Baltic Kristina. The port guaranteed the loan.

Port spokesman Karlis Leiskalns said that the board had instructed executives to take actions to ensure that the ferry pledged to Parex Bank was transferred to the port.

Leiskalns said that Riga Sea Lines had been insolvent for quite some time. He also said that Riga Port has not decided yet what to do with the ferry.

Riga Sea Lines was founded in January 2002 to carry out ferry service between Riga and Stockholm. Other than the port, its largest shareholders are Riga City Council (35.48 percent) and Astramar (27.51 percent). Last year it posted sales of 5.5 million lats, up 11 percent from 2003, though it was 494,000 lats in the red.

Under the previous Riga city administration, the port enjoyed a great deal of support. However, after the Social Democrats were ousted in favor of a right-wing coalition in March, Riga Sea Lines lost whatever standing it had.

Most observers believe that the company will be liquidated, given the size of its indebtedness and the unwillingness of shareholders to bail it out.

What's more, the Transport Ministry, led by Ainars Slesers, began talks with Tallink, the largest passenger ferry company in the Baltics, about ferry service between Riga and Stockholm. All the details have been agreed upon, and it is expected that a Tallink ferry will make its first scheduled trip to Riga sometime in January.