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Oil terminal sale nets euro103 million for Latvian government

Oil terminal sale nets euro103 million for Latvian government

Latvia's government sold its remaining shares in a lucrative oil terminal on Thursday, netting 74.2 million lats (euro103 million; US$135 million) in the Baltic state's largest privatization effort to date.
The government's 38.6 percent stake in Ventspils Nafta, one of Latvia's last state-held enterprises, was sold in a two-hour auction, though it was unclear whether a new strategic investor would emerge from the sale.
The final auction price was 1.84 lats (euro2.62; US$3.34) per share, slightly above the minimum bidding price of 1.81 lats (euro2.58; US$3.29). One investor submitted an aggressive bid for 18 million shares, or 17 percent of Ventspils Nafta, as soon as the auction started.
The bid was later confirmed, meaning the oil terminal now has a new significant shareholder, auction organizers said.
Though the government had hoped for more revenue, Economy Minister Aigars Stokenbergs hailed the auction result.
"We pulled off the sale in one day, something the government had been unable to accomplish for several years," he told reporters.
Ventspils Nafta, a multi-business group that also has interests in shipping, media and real estate, has been beset in recent years by infighting among managers of Latvijas Naftas Tranzits, a private firm that controls nearly 49 percent of the group.
It has also been hampered by a de facto embargo by Russia, which stopped delivering crude oil via pipeline to Latvia in 2003. The terminal has been forced to import crude by rail.
Both Stokenbergs and Valery Kargin, president of Parex Bank, one of Latvia's largest banks and lead organizer of the sale, complained that discord among Ventspils Nafta managers had a negative impact on investor perception of the sale. However, they both expressed hope that the sale would bring stability to the company's operations.
Many in Latvia criticized the auction's format _ a so-called Dutch auction that allows the seller to sell all the shares in a short timeframe. Historically such auctions were designed for items such as fish and flowers that spoil quickly, although they have gained popularity after Google Inc. held its initial public offering in a Dutch-style auction.
Stokenbergs deflected the criticism, saying the auction had been "open to all." He also cited a 1997 contract between the government and Latvijas Naftas Tranzits that gave the latter a veto over any possible sale of the state's holding in Ventspils Nafta.
Market reaction to the deal was volatile. In its biggest daily gain in five years in the morning, Ventspils Nafta stock soared 16 percent. However, the stock later plummeted, ending trading on Thursday down 12 percent at 1.95 lats (euro2.78, US$3.54), thus closing the gap with the auction price.


Updated : 2021-04-19 03:12 GMT+08:00