Austrian investor determined to take over Ventspils Nafta

  • 2006-09-13
  • By TBT staff
RIGA - A group of Austrian investors has expressed its intention to acquire control over Ventspils Nafta by buying a majority stake in a subsidiary company.

The group, represented by venture capitalist Herbert Cordt, has asked the government to cease from selling its stake via an open auction scheduled for Oct. 7. The Economy Ministry, however, responded by saying it would not change its plans.
In interviews to Latvian media, Cordt said that he and other Austrian investors would buy a majority stake in Ventbunkers, a Latvia-registered firm that in turn owns a majority interest in Latvijas Naftas Tranzits. LNT, for its part, owns nearly 49 percent of Ventspils Nafta, the oil and oil products terminal on the Baltic Sea.

"My partners and I have been in talks on taking control of Ventbunkers for quite a while," Cordt told the Telegraf daily. "And soon we'll be receiving a controling stake" in the company.
Several Ventbunkers owners confirmed their intention to sell their stakes in the near future.
At the same time Cordt expressed dismay at the government's recent decision to sell its 38 percent stake in Ventspils Nafta via a so-called Dutch auction, where the seller starts at a high price and gradually decreases. He said the government would be better off working with a strategic investor who would help give the asset added value, and hence, increase shareholder value.
"If a government organizes an auction of such a highly prized asset right before parliamentary elections, then it looks quite contradictory," Cordt said. "This auction does not make sense."

When told that the government's hands were tied with the auction and that any decision could be vetoed by other Ventspils Nafta owners pursuant to a contract signed in 1996, Cordt said that the contract should be amended.
Latvian government officials, however, were unimpressed by Cordt's plea and signalled their determination to go ahead with the auction, which will take place two days before parliamentary elections. Economy Minister Aigars Stokenbergs was quoted as saying the government couldn't modify its plans to the beck and call of individual investors.

Ventspils Mayor Aivars Lembergs, who chairs the board of Ventspils Free Port, expressed consternation at the Austrians' intention, saying if "they want to waste their money" then let them go ahead and do it. Lembergs is also a minor shareholder in several Ventspils-based transit firms.
In order to acquire control over Ventbunkers, the Austrians will most likely purchase a 58 percent stake owned by Yelverton Investments, which is registered in the Netherlands.

The government hopes to earn more than 100 million euros from the sale of its stake in Ventspils Nafta. This week Parex Bank began road shows for the upcoming sale, though the advisors are hard-pressed to provide potential investors with information given the low level of transparency in Ventspils Nafta's operations, Bloomberg reported last week.
Ventspils Nafta was the Soviet Union's second largest oil export terminal. Russia ceased supplying crude oil to Ventspils Nafta in 2003. Though Russian oil authorities claim they need to first supply the new oil terminal in Primorsk on the Gulf of Finland, many observers believe that they shunned Ventspils, a non-freezing port, due to the Latvians' reluctance to sell.