Latvian Privatization Agency News

The Latvian privatization agency cleared Latvian Shipping to sell part of its loss-making refrigerator fleet to concentrate on its core tanker business, Reuters reported. The agency gave the go ahead to sell seven Kursk-type refrigerator vessels that are unable to handle containers and had said that the funds raised must be reinvested. Shipping, currently in the final stages of privatization, has said the total balance sheet value of the ships is $40 million. Shipping's strategy -- if and when an investor arrives -- is to strip all non-core business away by selling most of the refrigerators, as well as dry-cargo and gas vessels. The firm operates a fleet of 49 ships -- 34 tankers…

The Latvian Privatization Agency said on Thursday it had received two bids for the government's 68 percent stake in Latvian Shipping, one of the world's largest oil products transporters. "We have two contenders who expressed interest in participating in the Latvian Shipping privatization and have made their bids," said the economy minister, who heads the privatization agency's council. The agency did not name the bidders and the government has not provided estimates on the size of the sale. The Latvian Cabinet is expected to set the minimum price for the auction on April 10, while the auction itself will take place in May. The government has been trying to privatize the company since 1996, but its previous attempts have failed due to a lack of interest and political bickering.

Latvian Shipping has started a renewal of its aging fleet by placing an order for six new tankers, according to the company's president. Andris Klavinsh said the firm had signed a letter of intent with Korean shipbuilders to construct tankers worth between $168 million to $210 million and is awaiting a go-ahead from the Latvian privatization agency. He declined to name the Korean shipbuilders involved. Shipping has had problems with fleet renewal due to its stalled privatization. It now operates a total of 60 ships, including 36 tankers, two LPG tankers and 19 reefer vessels. "Latvian Shipping's tanker fleet is older than that of our competitors and if we don't invest in fleet renewal we could lose market share," Klavinsh said.

The ongoing saga to partially privatize the world's 19th largest shipping company took another turn last week, as officials with the Latvian Privatization agency confirmed that final selloff rules for 100-percent state-owned Latvian Shipping are expected to be approved this week. But the process to sell the company has been marked with so much turmoil that the news did little to encourage potential investors. Latvia's government officials, however, said the sale could take place by the end of the year, leaving the final rules to be settled by the agency. The Agency has already sent out preliminary guidelines passed by the cabinet to 15 potential investors, including shippers and investment funds in Scandinavia, U.K. and the U.S., Privatization Agency head Janis Naglis said.

Latvian Shipping has reportedly begun a renewal of its aging fleet by placing an order for six new tankers. According to company officials, the firm had signed a letter of intent with Korean shipbuilders to construct tankers worth between $168 million to $210 million and is awaiting a go-ahead from the Latvian privatization agency. The company has had problems with fleet renewal due to its stalled privatization. It now operates a total of 60 ships, including 36 tankers, two LPG tankers and 19 reefer vessels. The average age of the company's tanker fleet is 17.3 years, while the average age of competing fleets is 8.4 years.