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Latvian Shipping Company plans to increase base capital to EUR 120 million

Photo: siaserviss lv.
Latvian Shipping Company has plans to increase its base capital to EUR 120 million by releasing new shares in a closed emission of shares, according to information from Nasdaq Riga.

It is mentioned in the statement that following a request from Vitol Netherlands B.V., the matter of increasing base capital was added to the extraordinary shareholders meeting, which is scheduled for 19 September.

At this meeting, it is planned to support the increase of base capital by EUR 60 million to EUR 120 million by releasing new shares in a closed (not public) emission of shares in order to refinance debts of the shipping business.

In the first half-year of 2017, Latvian Shipping Company worked with turnover of EUR 43.69 million, which was 3% less when compared with the same period of 2016. The concern also gained profits worth EUR 8.597 million.

15 August marked the conclusion of Vitol’s extended mandatory buy-back offer of Latvian Shipping Company shares. After that, Vitol’s participation in Latvian Shipping Company’s capital increased to 90.79%.

The extended offer proposed buying back 34,501,729 shares of Latvian Shipping Company, which forms 17.25% from the company’s shares.

In accordance with the government’s decision, state-owned shares in Latvian Shipping Company were sold in the buy-back offer. The amount that was paid for those shares was EUR 14.2 million.

Privatization Agency’s public relations manager Guntis Karklins had previously explained that this decision was made based on the fact that the state is a minority shareholder in the company – the shares owned by the state do not provide influence over decision-making processes and management in LSC.

The decision was also made, considering that as the company leaves the stock exchange and becomes a closed joint stock association, the state would have limited options to use its shares. On top of that, liquidity of those shares would be low.

It is also important to keep in mind that LSC will have to comply with Cabinet of Ministers’ order on privatization issued on 27 December 2001, and compliance does not rely on the involvement of the Latvian state in company affairs.

Conditions provide that LSC has to be registered in Latvia and its management has to be located in Latvia; the company has to retain its original name; the company has to retain jobs in coastal structural units and ships owned by the concern. On top of that, the company is not allowed to change its shipbuilding policy (with focus remaining on local companies and local residents).

The company has to secure financial support for the Maritime Academy, as well as invest finances in restoration of the fleet.


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