Under the agreement, DFDS Tor Line is obliged to pay $47.6 million for the block of shares and invest another $60 million in the shipping company within three years, the State Property Fund reported.
The agreement was signed between Povilas Milasauskas, managing director of the State Property Fund, on behalf of Lithuania, and Ole Frie, DFDS Tor Line's president and managing director, Peder Gellert Pedersen, deputy director for the Baltic Sea region and Leif Bramer, general adviser of the DFDS group, on behalf of DFDS Tor Line A/S.
Povilas Milasauskas, managing director of the State Property Fund, said that the third privatization of LISCO should bear fruit, as a strong and reliable investor has entered the market.
Moreover, the DFDS group has started a dialogue with small shareholders already in the course of negotiations and it is expected that its results will be acceptable to both parties.
In the opinion of Milasauskas, the sale of LISCO to DFDS Tor Line, a company recognized worldwide in shipping, will strengthen Western investors' trust in Lithuania.
The acquisition of LISCO was an important step taken by the Danish company into the Baltic region, beneficial both to the company itself and Lithuania, DFDS Tor Line officials said April 23.
The company said they did not have immediate plans to increase shipping tariffs and pledged to seek a constructive dialogue with LISCO's minority shareholders and Lithuanian carriers.
"LISCO's privatization agreement contains an article regarding the shipper's minority shareholders. We are committed to entering into a constructive dialogue with them after successfully closing of the deal. Perhaps they will want to keep their shares, or seek other options. It's early to speak about that now," Ole Frie, DFDS Tor Line's managing director, said in a news conference.
DFDS Tor Line will pay for the shares after certain obligations related to LISCO's restructuring and other issues are carried out, as provided for in the agreement. The State Property Fund expects Lithuania will receive the money by early July.
After restructuring, the Lithuanian state will retain control of 23 tramp vessels, while DFDS Tor Line would take over LISCO's fleet of ferries. Under the current deal, the Lithuanian state would keep 79.9 percent of shares in the tramp line and 3.4 percent in the ferry line, estimated to be worth $38.6 million and $21 million respectively.
The Lithuanian government is attempting to privatize LISCO for the third time. Earlier deals foundered on disagreements over price for the state's portion of shares in the aging fleet Lithuania inherited from the former Soviet Union.
This round hasn't exactly been smooth sailing either, and it's still not clear whether the government of Prime Minister Rolandas Paksas will successfully navigate the deal to a safe landing.
As negotiations with DFDS Tor Line were concluding, Lithuania's national association of road carriers, Linava, demanded the right to take part in the bidding process. Linava is made up of truckers and other carriers who make frequent use of LISCO to move cargo to and from Western Europe.
When Linava was told the time for bids had passed, Lithuanian transporters cried foul, saying they hadn't been informed of the latest privatization. Lithuania's truckers took to the roads in protest, shutting down the already clogged streets of the capital city with two lanes of semis crawling slowly.
Linava found support from a former Lithuanian justice minister, who personally joined the protest. The protest also caused a former Linava president, now deputy transportation minister, to resign, citing a possible conflict of interest.
Moreover, because of public discontent with previous less-than-transparent privatization of Lithuanian state assets, Paksas' opposition to the sale of shares in the Lithuanian oil company Mazeikiu Nafta to the U.S. company Williams in 1999 caused his ratings to soar, especially after he resigned over the matter – Lithuania's new crop of parliamentarians saw the chance to confront the deal with DFDS.
Lithuania's rising star, the new Social Democratic Party, seized the moment and registered a draft resolution in Parliament for halting the deal. While the resolution didn't reach the critical mass needed for immediate passage in Parliament, it did attract a number of center-left social liberals from the New Union, a partner in the coalition government with the Liberal Union of Paksas.
Arturas Paulauskas, chairman of the Parliament and leader of the New Union, switched sides to join the social democrats on the issue and took a large number of his faction's MPs with him.
Lithuanian MPs decided to consider the deal further at the same time Paksas is signing the contract, essentially leaving the matter in dry dock until all jurisdictional disputes are solved, presumably by the courts.
Paulauskas said he and other critics of the deal - including the Parliament's economics committee, the state prosecutor's office and a good portion of the public - are still waiting to see the text of the agreement. Paulauskas said the government had failed to respond to his request to see the document and especially the annexes that contain all the fine print.
Without more details, he said, the Parliament and the public can't make an informed decision.
President Valdas Adamkus, who earlier asked the Lithuanian Office of Special Investigations to present intelligence on LISCO's privatization, came down on the side of the Paksas government.
"The head of state believes the agreement with Denmark's DFDS Tor Line, with extensive experience in navigation, will insure investment in modernization, the interests of the company's small shareholders and an opportunity for all Lithuanian carriers to use ferry lines of strategic importance to Lithuania," Adamkus' spokeswoman, Violeta Gaizauskaite, said.
MPs have been responsive to fears by small holders in LISCO that their shares will be worth little after the state sells its stake to the Danish company. DFDS promised to buy, but shareholders are seeking a minimum price per share for buying them out.
Paksas adviser Ona Jukneviciene said everything depends first of all on ironing out procedural issues.
"Do they have to present an official proposal in line with a parliamentary amendment which isn't in force yet, or can they propose alternatives, such as conversion of shares?" she asked reporters.
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