Shipper stigmatized among employees

A recent closed subscription for shares in Latvijas Kugnieciba (Latvian Shipping, or LASCO) for current and former employees largely failed, with only one-third of the shares on offer actually being sold.

Six percent of the company's 12 million shares were offered between Feb. 18 and Nov. 15 to 5,000 potential subscribers.

However, less than 2,000 actually bothered to purchase shares.

LASCO announced financial results for the first nine months of 2002, showing a loss of almost $6 million, contrasting with record profits of more than $26 million for the same period last year.

Talis Linkaits, head of the administrative department of the Latvian Privatization Agency, said the number of subscriptions should not be linked to LASCO's disappointing financials.

Linkaits told The Baltic Times the actual number of subscribers was roughly what the privatization agency had expected.

Linkaits added that last year's freight rates were exceptionally high, and comparable profits are not expected to be repeated in the near future.

According to company management, administrative costs, litigation with the Gdansk shipyard in Poland, and unfavourable market conditions in the shipping industry affected LASCO's nine month performance.

The closed subscription offered to current and former employees was still attractive in that investors could expect solid capital gains on the share price, said Linkaits.

Earlier this month Arnis Ozolnieks, head of the Latvian Privatization Agency, said poor results were due to objective factors, and that he hoped for better annual results than this year's planned loss of $7.7 million.

Ozolnieks said that privatization regulations provided that unsubscribed LASCO shares could be sold for cash on the Riga Stock Exchange, but that the agency had to make a separate decision on the matter.

Currently, the company's largest shareholder is the oil terminal Ventspils Nafta, which holds almost 50 percent of LASCO stock since last summer.

LASCO is one of the largest product carrier shipping companies in the world. It was established as a state owned enterprise in 1991 when newly independent Latvia inherited 87 ships from the former U.S.S.R.

LASCO now owns a fleet of 58 vessels, among which 40 product tankers transport petroleum products, light chemicals, various oils and other liquid products. In addition, the company owns 14 refrigerator ships.