Staburadze said it had purchased the shares in Laima from the New Technology and Business Development Corporation, formerly the Ave-Lat Group, owned in large part by former Prime Minister Andris Skele, for an undisclosed sum, but thought to be 8 million lats ($12.8 million).
Because Staburadze are unable to pay for their purchase, loan agreements will be negotiated with two banks from Iceland and Latvia. Staburadze's man-agement denied that Laima's assets could become collateral for these loans and confirmed that only Laima's stock might be mortgaged.
"I'm proud of the deal I've made," Staburadze's council chairman Gisli Reynisson told Latvian TV. Company spokeswoman Ineta Rudzite said the deal was planned and carried out with the intention of creating a company strong enough to compete at Latvian and European level, thus ensuring the future of Latvia's long tradition of confectionary production.
The combination of the two companies' long experience would create new opportunities, said Rudzite.
"This deal will allow us to reduce operating costs significantly, thus increasing our competitiveness in the crowded Latvian and European confectionary market," she said.
Laima's management, who were involved in the buy out negotiations were skeptical about the Staburadze deal. "In order to create a strong company it is not enough to unite any two businesses. It takes investment and a detailed strategy plan," Laima's board chairman Ivars Kalviskis told Baltic News Service.
"Judging from the current situation in Staburadze, investments in Laima are unlikely," Laima's board chairman said.
When asked whether he will continue in his post, Kalviskis said: "If this is the situation I do not want to have any part in Laima's demise."
He said that in August he as Laima chief executive had had the opportunity to buy Laima shares. "I agreed with the bank on a loan for the purchase of shares ... but at the last moment the seller introduced a new re-quirement which I could not meet," Kalviskis said.
Because Staburadze's management failed to inform the Riga Stock Exchange of the deal, trading in the company's shares at the exchange was suspended from Nov. 23. On Nov. 24 the company submitted information on the deal to the exchange, with the stipulation that it should remain confidential for a period to end two years after the deal's conclusion, which Staburadze then said it expected to occur before Feb. 1, 2001.
The stock exchange disagreed. "We believe the information received from Staburadze cannot be confidential because it cannot affect an already concluded deal," said the stock exchange's spokeswoman Ilze Nagla.
The stock exchange said not disclosing this infor-mation to the public might harm the interests of small investors. It has therefore asked the Stock Market Commission to request this information from Staburadze and to overturn the confidentiality classification.
The second largest shareholder in Staburadze, Latvijas Krajbanka (Latvian Savings Bank) sold its 14.4% stake to Staburadze council member Trigvi Haraldsson on Nov. 27, following another conflict over the purchase of the small confectionery company Noi Baltija, earlier this year. The bank believed the Noi Baltija takeover was not evaluated properly and asked for an independent audit of the deal.
Krajbanka's decision was made after Staburadze purchased the companies Noi Baltija and Laima without informing Krajbanka about the deal, the bank's representative said. "We are not willing to take responsibility for these deals and future plans," she said.
Staburadze made post-tax profits of 158,000 lats in the first 10 months of this year. Net turnover at the company was 4.2 million lats. The company's assets at the end of October stood at 4.443 million lats, but owner equity was 3.664 million lats.
Nordic Food, owned by two Icelandic companies, holds a 48 percent stake in Staburadze. Staburadze's share capital is valued at 3.037 million lats on the Riga Stock Exchange.
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