"It is an important day for the Latvian Privatization Agency," said its head, Janis Naglis. "Investors are giving good value to Latvia's future."
The public offering, the greatest in Latvia's history, represented 26.85 percent of the company's share capital and reduced the government's holding to 10.0%.
Proceeds will benefit those repressed politically in Soviet times, pay toward building Latvia's hall at Expo 2000 and help to meet obligations on workers' back pay from insolvent state-owned companies.
The auction followed a well-planned, three-month campaign featuring road shows in Western Europe and progressed under the watchful eyes of RSE, Latvian Privatization Agency, LG, and Hansabanka and Nomura International as financial advisors.
"I am very pleased that the issue has been so successful. We have completed it very quickly. Three months for privatization in any country is a record," said Michael Boardman of Nomura International. "All the people involved have assured very high transparency."
RSE President Uldis Cerps said there are lessons from the LG transaction to be applied by comparison to the foundering privatization of shares in the power generation and transmission company Latvenergo.
"The first lesson is basically that the process needs to be transparent, that professional financial advisors need to be approved, a marked difference from the Latvian Shipping Company where there is no professional financial advisor, indeed, for disposal of 43 percent of the shares. The third lesson is that the minimum price is set by the market and not by the Cabinet of Ministers. The fourth is that this process can be successful by doing it in the local market," he said.
Adrians Davis, LG president, said the auction should set the tone for future transactions in privatization.
"Society should value the importance of this process, and Latvia which has chosen the political way now has to choose the economical way. Latvia Gaze its a good example. It is a high time for society to understand that the old models from times of socialism are useless, and the process of privatization has to be accelerated."
The largest Latvijas Gaze shareholders on March 26 were government of Latvia, Gazprom, Ruhrgas, Preussen Elektra, Itera and Fortum. The company owns 6.4 billion cubic metres of underground gas storage facilities, the only gas storage construction in the Baltic region.
The four successfull bidders received portions of 4.5 million, 3 million, 2 million and 1 million shares.
The Company's sales in the 11 months to November 1999 were $128 million with a net profit of $13.6 million. During same period, Latvijas Gaze sold 1.059 billion cubic meters of natural gas and 28.5 thousand tons of liquid gas.
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