Latvian Shipping Sell-Off Rules Expected This Week

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. "The games previous governments played around Latvian Shipping have damaged investor confidence in the seriousness of the government's intentions," Naglis said. "In some of the courtesy replies we have received, we can read between the lines a disbelief, `Is this really the final decision of your cabinet?'" The Shipping privatization was originally launched four years ago but the tender was frozen for two years due to government wrangling and a pending court case. Latvia earlier this year tried to revive the tender but doubled the price on a 10 percent portion of the selloff, a move which eventually sunk the selloff. According to the cabinet's new plan, 34 percent of the firm is to be offered in a first-round cash auction, with the winner to get another 10 percent in a separate transaction for the same tender price. Shipping has 200 million shares and first-round bidding is expected to start at 0.45 lats to 0.59 lats per share, putting the size of the deal in the neighborhood of $88 million. Latvian Shipping is the world's 19th largest shipping firm in terms of tonnage. Its profit for the first half of 1999 was 3.99 million lats.