| Lithuanian national
fleet: lessons of privatization
Marius Vakaris
At a single scribble
In the middle of the 90-s Lithuanian
shipping company (LISCO) was a prosperous company with big potential. LISCO and AB Klaipedos
transporto laivynas (Klaipeda transport fleet) were among those enterprises, which had
survived through the economic crisis, worked profitably and gave to the state budget tens
of millions of hard currency. Therefore the decision to strike off this shipping company
from the list of strategic enterprises was very much unexpected for the management of
LISCO.
State Property Fund started to prepare for the privatization of
merchant fleet immediately, intending to get quick results beforehand and completely
relied on the intuition and consultants from abroad.
The first tender for privatization was launched in 1998 and was a
complete fiasco the tenderers suggested simply ridiculous prices. Due to this reason
the second attempt also failed last year because the period for privatization coincided
with the shipping crisis in the world.
Only the third time, in June 2000 the persistence of State Property
Fund was rewarded, though one cannot say that the deal ended successfully.
During the three years when the attempts were made to privatize
Lithuanian merchant fleet and later transport fleet the both companies were transferred
from the jurisdiction of their ministries to State Property Fund. As a result, the net
profit of LISCO decreased from 44.2 million Litas in 1998 to 5.1 million Litas in the
early 2000. Almost by half the net profit decreased in AB Klaipedos transporto laivynas
from 19.9 to 10.0 million Litas. State Property Fund wishing to sell those companies as
soon as possible reached the position that their profitability was decreasing every year.
The winner of a tender was not able to pay
It is clear that the potential investors started to
propose lower prices. But the wish of state officers to part with the national fleet as
soon as possible was bigger than reasonable arguments.
The first to be sentenced was AB Klaipedos transporto laivynas.
The winner of a tender was a consortium composed hurriedly by Norwegian shipping company J.O.Tankers
and Kaunas concern SBA where the latter had 95% of the shares. For the enterprise with the
authorized capital of 130.8 million Litas, with 16 refrigerated vessels of the total
tonnage about 70 thousand tons the consortium offered 83 million Litas and promised to
invest 50 million Litas more.
The contract for privatization was signed on the last day of 1999.
Consortium pledged to pay money not later than in February 2000, but soon they asked for a
later deadline. The payment deadline was postponed up to November, but in October Concern
SBA declared about the termination of the deal.
The shameful deal was terminated by
minor
shareholders
In summer 2000 the winner of the tender
for privatization of LISCO was declared. The contract was awarded to consortium registered
in Holland B.B.Bredo B.V. which was made of two Izrael companies that were not very
much known in Europe - Kamor Ltd., Sprinter Gadot-Yam Ltd - and the Danish
company DFDS Tor Line. The Consortium started to dictate their rules from the very
beginning. State Property Fund agreed to decrease the price of packet of shares from 51.2
million US Dollars to 47.6 million US Dollars and the investment rate from 92 million US
Dollars to 76 million US Dollars. The potential buyer also required the 10 best LISCO
ships to fly the flag of the Marshal islands and to found 10 offshore daughter shipping
companies there. State Property Fund obediently agreed to those conditions and in October
19, 2000 the contract for privatization was signed.
The idea of the Consortium was inventive: to pawn the vessels with the
residual value of 49.5 million US Dollars to the bank, get credit from the bank and pay to
Lithuania for the shares of LISCO. This shameful deal for the country might have been
implemented if not the unity of small shareholders who immediately appealed to the court
about the decision to fly the flag of the Marshal islands on the vessels. The Consortium
had no money to pay and terminated the deal.
The end of LISCO
But the attempts to sell Lithuanian
shipping company did not end. Danish shipping company DFDS Tor Line appeared on the
stage, which earlier was one of the partners of the Consortium B.B.Bredo B.V. The
Danes were not interested in tramp fleet of LISCO but they were interested in four
Lithuania-Germany and Lithuania-Sweden shipping lines and six ferries.
The Danes suggested other scheme of privatization. They buy 76.36% of
shares for the same 47.6 million US Dollars, but only after the reorganization of LISCO
into a ferry line company and tramp vessel company, then they take the first one and the
other one remains to Lithuania.
The deal was signed on 23 April: 61.7% of LISCO shares were given to a
newly created company LISCO Baltic Service, 38.24% of shares to AB Lietuvos
juru laivininkyste (Lithuanian Shipping Company).
This was the end of the biggest Lithuanian shipping company (LISCO),
which had lasted for more than three decades.
What has remained of the national fleet?
Now the Lithuanian fleet consists of 15
refrigerators and 19 merchant vessels of different type. That could be the reason why the
new cabinet of ministers with the Prime Minister A.Brazauskas decided to postpone the new
round of privatization of AB Klaipedos transporto laivynas (Klaipeda transport
fleet) for an indefinite period. State Property Fund that intended to prepare the
privatization program of AB Lietuvos juru laivininkyste (AB LISCO) seems to remain
silent.
The authorized capital of tramp Lithuanian shipping company (LJL) is
over 200 million Litas. 73.24% of shares belong to the state, 6.36% of shares to DFDS
and the remaining shares belong to small shareholders. The Danes left the debts of 18
million US Dollars of bank credits to Lithuanian shipping company. The average age of the
fleet is 18 years. There are 609 sailors and 96 office workers.
In spite of such unenviable start positions, the administration of
Lithuanian shipping company with the director general Vytautas Vismantas see good
perspectives for the company. It has managed to keep high quality specialists as well as
the old links with shipping partners. The strategic plan for the development of Lithuanian
shipping company up to 2005 is under preparation now. The first months of the work of the
newly created company were rather successful. Up to the end of the year and for the first
six months of the existence AB Lietuvos juru laivininkyste expects to get the
profit of 3 million Litas.
AB Klaipedos transporto laivynas plans to renew the fleet of 15
refrigerators the average age of which is 18 years. The company had taken the niche in the
market of refrigerated cargoes long ago. As the majority of vessels are of medium tonnage,
it transports the cargo in small parties and it has a success in that. The company
finished last year with the profit of 10 million Litas. They expect to have the same
result this year too.
The administration of the company with Arsenij Bic at head from the
very beginning is not against privatization, because they need big investments for the
renewal of the fleet. But they think that they should not be in a hurry and it is very
much important to find a reliable investor.
I see good perspectives for both shipping companies. But one problem
is to be solved without delays to take both companies out of the jurisdiction of State
Property Fund, which is a real liquidator and to make them under the jurisdiction of the
relative ministries. Otherwise the remains of the national fleet will be lost,
persuades the governing structures the former president of LISCO Antanas Anilionis. And
one is to follow the opinion of a person whose name is inscribed into the history of
Lithuanian shipping and who managed to revitalize and strengthen the national fleet. |
