Latvian Shipping Company's privatization terms settled

  • 1999-08-26
RIGA (BNS) - The government accepted Latvian Shipping Company's privatization terms envisaging to sell a 44 percent stake to a strategic investor.

Thirty-four percent of shares will be sold at an open auction and 10 percent to the highest bidder. The bidding is expected to be announced in September this year and the purchase-sale agreement should to be signed in December.

Economics Minister Vla-dimirs Makarovs said the Privatization Agency's proposal to sell 51 percent of shares to an investor was not supported because such a move would lead to a loss of interest on part of both the strategic investor and small shareholders.

The starting price will be 0.45 lats ($0.76) to 0.59 lats per share, in line with Price-waterhouseCoopers assessment. The funds from the sale will be channeled to satisfy the claims of employees of the bankrupt state enterprises.

Fifteen percent of shares will be sold for privatization vouchers at a public offering by Sept. 1, 2000 and 6 percent to the shipping company's employees, who previously could expect only 4 percent. The remaining shares will be sold for cash at a price which is adequate to the price set at the public offering. They will be publicly offered not earlier than next year or even in the year 2001.

Makarovs believes that the government's decision to sell 44 percent of the shares to a strategic investor proves the ability of political parties to reach agreement and generate maximum revenues for the state budget. The proposal was accepted with seven votes in favor and three abstentions, including Ma-ka-rovs' vote.

LPA Director General Janis Naglis said he was satisfied with the government's decision, stressing that the approval of these privatization terms gives a chance to raise money for the privatization fund as well as to secure payments for the employees of the bankrupt enterprise.

Naglis said several investors have shown interest in the Latvian Shipping Com-pany's shares. Because the sale of the shipping company in Lithuania is developing rather unsuccessfully, bidders from Scandinavia, who have until now been interested in the Lithuanian shipping company, could be attracted by the Latvian com-pany's shares.

Ventspils companies have also been actively interested in the shipping company's privatization.

"I think Ventspils companies have accumulated rather big funds and they can join forces to participate in acquiring this 44 percent," Naglis said.

Druvis Skulte, the com-pa-ny's board chairman, also gave a positive assessment to the government's decision.

"It is pleasant that this reform has finally started and a decision has been taken. Finally an agreement between the parties has been reached," Skulte told BNS.

He expressed hope that there will be one new owner, "instead of thousands of owners, who just want to get benefits from the company." The shipping company could now expect the much needed investment, said Skulte.

He also noted that the state should activate the operations of the company.

"A shipping-business environment should be established," said Skulte, adding that the taxes and legislature pertaining to the shipping sector should be improved.