Unease surrounds Sveza bid

RIGA - Latvian state-owned forest management company Latvijas Valsts mezi is eyeing shares in the wood processing company Latvijas Finieris, reported business daily Dienas Bizness. “If shares in one of the world’s leading birch plywood producers, Latvijas Finieris, would be available on the market, Latvijas Valsts mezi could buy the shares,” Latvijas Valsts mezi Chairman of the Board Roberts Stripnieks commanded.

The struggle for Latvijas Finieris shares continues, and it is unclear if the potential buyers will want to continue the company’s business of plywood. It’s this decision that will have an impact on managers of state forests as well as other forest owners in Latvia, said Stripnieks.

Latvian forest owners are concerned about Russian wood processing company Sveza’s - which has shown interest in the Latvian firm - statement that it could import certain Russia-produced wood products to Latvia that would be processed at Latvijas Finieris. However, Latvijas Finieris is a company of strategic importance for Latvian forests, and it plays a unique role on the local market and there is no alternative to it, said Stripnieks. He said that the owner of Latvijas Valsts mezi - the Ministry of Agriculture - was watching the developments regarding Sveza’s bid for Latvijas Finieris shares.

Stripnieks reiterated though that buying a stake in Lavijas Finieris would be up to the government. “We are open to any offers regarding share purchases, but I do not think that Latvijas Valsts mezi could become a majority shareholder. Our mission here would be to ensure stable future operations for the company,” he said.
In October, Latvijas Finieris was applying pressure on company shareholders interested in selling their shares to rival Sveza, hinting that they would lose their jobs if they sold to the Russian company. Sveza’s representative, Ieva Kukule, told Nozare.lv that the threats were being made against those shareholders who work at Latvijas Finieris, or have relatives working for the company.

Sveza does not plan to eliminate any jobs at Latvijas Finieris after buying the shares; neither does it plan to halt the company’s business, she noted.
Saeima’s National Security Committee got into the act, urging the authorities to pay attention to trades with Latvijas Finieris shares. The Commission’s chairman, Dzintars Jaundzeikars, said that Latvijas Finieris was a highly important company for the state, therefore authorities should find out everything about the takeover bid for the company.

Sveza is ready to pay 10,000 lats (14,280 euros) for each Latvijas Finieris common share with voting rights, and 1,000 lats for each share with restricted voting rights. This equates to an offer priced at nominal value. The Latvijas Finieris annual report showed that the company’s share capital is 40.4 million lats, consisting of 7,242 shares held by 434 individuals and one legal entity.

Latvijas Finieris’ management previously said in a statement that it was shocked at Sveza’s aggressive offer.
Sveza is one of Russia’s largest wood processing companies. Director General Andrei Kashubski said in an interview with the Lietiska Diena magazine in October that Latvijas Finieris’ management didn’t respond to Sveza’s invitation to launch talks on the matter, which is why the Russian company made a public takeover bid.
“We offer a very good price, and we have every reason to believe that our offer will be considered advantageous by Latvijas Finieris shareholders,” said Kashubski. Sveza has no information about Latvijas Finieris’ shareholding structure, and therefore it made a public offer to all co-owners of Latvijas Finieris. Kashubski also said that Sveza hoped to acquire all shares.

Latvijas Finieris management wants shareholders, who “know the company’s successful development and stable operations,” would be able to properly evaluate their shares and their long-term potential, and not sell their shares to a company that has made such an “improper and questionable” offer.
If Sveza were to buy all the shares at its price, it would pay 49.45 million lats. Nevertheless, the price offered is at least half what it should have been, believes Laika stars expert Janis Pinnis.

In a 2009 list of Latvia’s 101 most valuable companies comprised by the business magazine Kapitals, IBS Prudentia and NASDAQ OMX Riga, Latvijas Finieris was ranked 27th with a value of 73.86 million lats.