Will Fourth Time Be A Charm?

Tuesday, May 15, 2001
Latvia's government officially admitted defeat on Tuesday in its fourth attempt to sell sea cargo firm Latvian Shipping, ordering the economy ministry to draw up a new tender to sell the firm. "The government decided to stop the Latvian Shipping privatization process based on the current rules and asked the economy ministry to prepare new guidelines within two weeks in order to continue," Economy Minister Aigars Kalvitis said. Privatization officials were sent back to the drawing board last month after the two finalists selected by the government failed to submit a bid bond to take part in an auction for a 68 percent stake, which had been set for May 11. There still seemed to be a chance to salvage the tender, however, when representatives of one of the short-listed bidders said it was still interested in the firm. Advisers to Italy's d'Amico Societa di Navigazione S.p.A. said the firm had not put down the $5 million bid bond simply because it did not think its money was adequately protected under the rules on how it should be submitted. However, Kalvitis said the government thought its chances of completing a deal were better if it sought new bids. "The cabinet was not sure that the privatization could end successfully if it were to continue with the current bidders," he said, adding that the ministry still must decide whether to offer 68 percent again or another size stake. The Latvian Shipping privatization has been the subject of heated political debate for several years, with disagreements between coalition partners on the issue helping to bring down at least two governments. Privatization agency head Janis Naglis said the shipper could still be privatized this year. "I think this cabinet decision makes us mobilize our forces and try to privatize Latvian Shipping again this year," Naglis said. Latvian Shipping -- which operates 49 vessels, including 34 tankers -- was the world's third-largest shipping firm in terms of oil product handling in 1999. It posted a 2000 loss of $20.5 million, largely due to a revaluation of some assets. Its gross profit last year was $5.3 million, and its first-quarter net profit this year was $12.4 million. Trigon Capital, advisers to d'Amico, had said the Italian firm saw Latvian Shipping as a good fit for its operations, as both were leaders in oil product tankers. They said combining Latvian Shipping with d'Amico's 25-strong tanker fleet would create the biggest product tanker group in the world. Trigon said on Tuesday it was too early to say if d'Amico would want to take part in a new tender. - (Reuters)
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