State-owned gas shares on sale March 27

  • 2000-03-23
  • Sandra L. Medearis
RIGA - Riga Stock Exchange will handle the biggest cash sale in its history March 27 when it sells 10.7 million state-held shares of Latvijas gaze.The shares represent 27 percent ownership of the company out of the 37 percent stake the government owns. The company is presently doing roadshows to contact potential investors. The sale is costing RSE $66,666.

Romands Melnieks, Ministry of Economics spokesman, said the presentation of Latvian gas shares has gone well and the ministry predicts the price of shares will exceed the minimal share value set at 1.80 lats (about $3.05).

"The potential of the company has been very well presented because Latvia's Gas has the ability to store gas over the winter period and export it overseas. The interest shown from overseas indicates that the West is very concerned about their future gas supplies," Melnieks said.

Latvia has the capability to store gas over the winter months and the Russian government has paid Latvia's Gas to store supplies from Gazprom, whose subsidiary, Itera Latvija, owns an 8.9 percent share according to RSE.

Melnieks said that gas reserves are decreasing in the West and a lot of interest has been shown from countries such as Sweden, Italy, France, and Spain.

"The ability of Latvia's Gas to start storing gas in the summer months is the reason why the shares that will be sold by the stock exchange, will exceed market value," said Melnieks.

On March 16, members of Latvia's Gas and ministers of Parliament presented a seminar at the London Stock Exchange about the sale of Latvia's Gas shares and its future potential to overseas investors. But people at home canbuuy, too.

"Such a big auction doesn't take place so often, so there is a great deal of interest, sai Ilza Natla, RSE spokeswoman. It is open to companies, the public, the residents of Latvia. The rules are the same for everybody," she said.

The Latvian government will retain 10 percent of shares in the company, so it will still be the governing body in the company's structure.

The history of Latvia's present gas supply system goes back to 1950 when the first 50 liquid gas tanks were installed, followed by construction of a liquid petroleum distribution station started in Riga in 1952. In 1962, Latvia started using natural gas from Ukraine for households. In 1997, the natural gas distribution station Korneti was constructed to serve multiple countries. In 1991 former gas suppliers were merged into one company, Latvijas gaze.