Officials expect to wrap up privatization

RIGA - Latvia hopes to sell its largest remaining state-owned companies in 2002 and to start liquidation of the Latvian Privatization Agency, the Latvian Economy Minister Aigars Kalvitis said last week.

The Latvian state is still a shareholder in five large companies - the Latvian Shipping Company, Lattelekom, the savings bank Latvijas Krajbanka, the gas utility Latvijas Gaze and oil loading company Ventspils Nafta.

The public offering of the state's last 3 percent stake in Latvijas Gaze in exchange for privatization vouchers which is currently under way is expected to be complete by Feb. 1.

The Latvian Privatization Agency's board has accepted the draft terms of the fourth attempt to privatize the country's shipping company, prepared in cooperation with the Riga Stock Exchange in line with guidelines approved by the Latvian government late December.

The LASCO sell-off is expected to start with the sale of 32 percent of the company's shares, or 64 million shares, at a public offering in exchange for privatization vouchers.

A further 51 percent of the company is to be sold on the Riga Stock Exchange for cash, 10 percent is to be granted to the state pension fund and 6 percent to the company's employees and pensioners, with 1 percent held back for privatization reserves.

The privatization agency's council will be asked to support the draft terms when it meets on Jan. 18, and if all goes to plan, the offering will start on Feb. 18, with shares also being sold to company employees.

On June 3 the agency and the Riga Stock Exchange will set prices for the stock exchange sale. All offers higher than the price set for the shares will be accepted and payment will be due by June 6.

LASCO has a registered capital of 200 million lats ($317.46 million).

The previous attempt to privatize the shipping company failed in spring 2001 after the two final bidders failed to come up with a $5 million collateral payment.

A 26 percent stake in Ventspils Nafta oil terminal is expected to be sold in a single package at a written auction.

Another 5 percent of the company has been reserved for a public offering in exchange for vouchers, and 7 percent is to be sold on the international market.

Another 5 percent has been reserved for what is currently the company's largest private shareholder, Latvijas Naftas Tranzits.

These shares are expected to be sold in the first half of 2002.

Of all the major privatizations ahead, that of a 51 percent stake in the fixed-line telecommunication company Lattelekom is the least clear, as the company's shareholders, the Latvian state and the Finnish-controlled Tilts Communications, are involved in litigation in a Stockholm court of arbitration after the Latvian side cut the company's monopoly term by 10 years from 2013 to 2003.

Both sides are negotiating a settlement which may involve the Finnish investors acquiring an additional stake in the company.

The 32.12 percent state-owned stake in the Latvian savings bank Latvijas Krajbanka will be the last to be privatized, as the bank oversees the purchase of state owned companies in exchange for privatization vouchers, the government decided in November.