Fourth Time A Charm For Latvian Shipping?

Wednesday, January 31, 2001
After five years of failed tenders and political turmoil, Latvia is once again bringing Latvian Shipping to the block in the hope of finally selling the company that has unseated governments and marred the country's image. Investors looking at the potential privatization of the 68 percent stake the state is offering in the world's 19th-largest shipping firm in tonnage terms, have until 10:00 GMT on February 1 to express interest in taking part in the company's fourth sell-off tender. A final auction is expected in May.

As with previous attempts to privatize the company, the latest effort has been surrounded by political bickering. Despite the dismal backdrop for the sale, however, the government says this time it is convinced it will succeed. "We will get the Shipping privatization moving ahead," Economy Minister Aigars Kalvitis said.

The latest two attempts to privatize a minority holding in Latvian Shipping failed due to low investor interest. The first tender flopped when the government doubled the offered price after putting the sale on hold for over a year. Now the fourth attempt to find a strategic investor for Shipping is taking place. Fatherland and Freedom, a junior partner in the four-party ruling coalition has publicly criticized the sell-off rules, although it approved them in a cabinet meeting.

Normally cool-headed Latvians and their leaders have been driven to despair over the impact of problems in the privatization process on the image of the post-Soviet country's image. "If we here continue quarreling and are unable to agree then all our work (building the country's image abroad) will not bring anything (very) positive," Foreign Minister Indulis Berzins said. Former Prime Minister Vilis Kristopans said the Shipping dispute helped lead to his government's downfall in 1999.

His successor, Andris Skele, also cited privatization rows when he stepped down a year later, when Shipping was the main item on the government's privatization agenda. Analysts say even without the bickering, enough investors may have been put off already to sink the tender. "Most probably there won't be too many (applications) because previous history with this company's privatization has undermined trust in the privatization process overall," said Roberts Indelsons, head of the Suprema brokerage in Latvia. However, some analysts note this time the government has made the sell-off more attractive by offering a majority stake. "That could be more interesting for potential investors," said Krajbanka analyst Ivars Bergs. - (Reuters)

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