Ventspils nafta
Joint stock company Ventspils nafta changes the development strategy and will further specialize in the transit area
Ventspils nafta / Release of a Adhoc News, transmitted by DGAP - a company of EquityStory AG. The issuer is solely responsible for the content of this announcement. ---------------------------------------------------------------------- Today, on December 17, 2008, the Supervisory Council for JSC Ventspils nafta has approved the change of the company's further development strategy and has consented to conclusion of a voluminous transaction, which will result in JSC Ventspils nafta specializing in management of assets related to the transit area in the near future, by discontinuing the Group's activity in other wide-ranging areas where the business of JSC Ventspils nafta Group was conducted as a result of diversification of business risks actively implemented up to now. By optimizing and reorganizing the activity of JSC Ventspils nafta Group, only investments into the areas of crude oil and petroleum products transit and shipping business will be retained in the management of the parent company. Along with the decision of the Supervisory Council for JSC Ventspils nafta, the companies working in the area of real property, printing and publishing will be sold in one set to its associated company JSC Latvian Shipping Company with the amount of this transaction reaching 82.7 million lats. The profit of JSC Ventspils nafta will reach about 40 million lats as a result of this transaction. Implementation of the reorganization plan of JSC Ventspils nafta is influenced by the global and local macroeconomic indices. This influence on the operating results of the companies of the Group has caused the necessity to change the further development strategy of both the entire Group and JSC Ventspils nafta as parent company, in order to ensure the necessary return of investments in the interests of all shareholders of JSC Ventspils nafta. On the basis of the recommendations of the local and international experts and advisers, the transit area, which has been the company's historic basic business, has been defined as the further strategic development direction of JSC Ventspils nafta. Such strategy will enable JSC Ventspils nafta to steadily develop one business area segment, focusing on its growth and improvement, especially considering the previous experience of several decades and the success in this area, as well as the international know-how, which has been actively acquired particularly in the recent years along with involvement of the international shareholder. As a result, by declining from the assets of JSC Ventspils nafta in areas not related to the transit business and by selling them for a market price accepted by Latvian and international experts, shareholders of JSC Ventspils nafta will gain significant profit, and the company's long-term assets will be replaced by assets of more rapid liquidity. A value increase for the entire Group will thereby be achieved, and JSC Ventspils nafta will obtain financial resources for further development of the new strategic development direction in line with the objectives that will be determined by the company's shareholders. In the intense conditions of global economic crisis, it would be irresponsible to pretend that this situation does not affect our Group. Therefore, we performed comprehensive and detailed monitoring and risk analysis for all companies of JSC Ventspils nafta Group, seeking a more optimal solution to ensure maximally efficient operation of the Group in the further years. We have actively worked, by involving remarkable intellectual resources, and have found such a model of further development that will minimize business risks of JSC Ventspils nafta Group on the one hand and ensure its increase in value on the other hand, emphasizes the Chairperson of the Management Board for JSC Ventspils nafta Olga Ptersone. We hold a view that the active work of JSC Ventspils nafta in terms of planning further stable operation of the Group will be a kind of incentive for the common economic development of Latvia in this economic situation. Another contribution that JSC Ventspils nafta will be making into promotion of the common economic situation will be the fact that the country will gain considerable support for the budget in terms or receiving several millions of lats in taxes as a result of reorganization. The transaction proves to be more advantageous for JSC Ventspils nafta owing to the fact that the assets to be sold are going to be in one set not in parts when entering into the purchase-sale contract with JSC Latvian Shipping Company. The payment structure of the transaction is planned in three parts: up to 25% of the payment amount will be received as an immediate payment after conclusion of the purchase-sale contract today, another 25% - until the end of February 2009 as the property will be gradually re-registered, and the remaining 50% - not later than until the end of the first quarter of 2010. JSC Ventspils nafta will additionally receive interest payments for the payment parts of the deferred payment, therefore additional income in the amount of several million lats will be ensured for JSC Ventspils nafta. On the basis of then topical economic processes and suggestions of international auditors, JSC Ventspils nafta was implementing a policy of active diversification of business risks in the last 10 years, by purposefully making investments into liquid and growth-oriented business projects outside its historical basic business area - crude oil and petroleum products transit. A relevant part of these investments is formed by exclusive real properties that are listed among the most liquid real properties in Latvia. The said policy ensured a stable work for JSC Ventspils nafta in the previous economic conditions, by ensuring favorable economic indices for the shareholders - risk distribution enabled flexible reaction to changes in the market situation in any activity segment of the Group. However, as the conditions of the economic situation are sharply changing, further development and maintenance of these investments is becoming financially less efficient for JSC Ventspils nafta parent company as a holding company not undertaking economic activity. Through reorganization, JSC Ventspils nafta will hence retain its investments in the subsidiary crude oil and petroleum products transshipment company Ventspils nafta Ltd, the subsidiary owner and operator of crude oil and petroleum products pipeline LatRosTrans Ltd (66%) and the associated company JSC Latvian Shipping Company (49.94%). Whereas it is selling investments into the subsidiary real property management company Nekustamie paumi VN Ltd (100%) and the subsidiary real property management company Rgas lcis VN Ltd (100%), as well as real properties in Riga, Briana Street 3; Ventspils, Talsu Street 75d; Jrmala, Dubultu prospect 51 and Lejastiezumi at Renda civil parish, Kuldga district. JSC Ventspils nafta is also selling its shareholdings in the printing company JSC Preses nams (95.4%) and the subsidiary publisher Mediju nams Ltd (95.63%). The aspect of real property must be considered also in relation to JSC Preses nams, as it owns several valuable real properties, and that is the main object of interest of the buyer. Whereas a relevant part of the printing company's business value is currently formed by orders of the particular publisher - Mediju nams Ltd. For that reason, business activity of these investments is in fact inseparable. Highly qualified independent professionals were involved in preparation of the reorganization transaction of JSC Ventspils nafta Group, which included: certified Latvian real property assessors Biznesa konsultantu grupa Ltd, Colliers International Ltd; member of the internationally recognized organization integrating professional qualified financial experts Institute of Charted Accountant of England and Wales Kelvin Hooke (BSc ACAI); financial consultants KPMG Corporate Finance; law offices Eversheds Bitns and Skudra & dris. JSC Ventspils nafta Further information - Gundega Vrpa, Public Relations and Advertising Manager, tel.: + 371 67229182; e-mail: gundega.varpa@vnafta.lv News Source: NASDAQ OMX 17.12.2008 Financial News transmitted by DGAP ---------------------------------------------------------------------- Language: English Issuer: Ventspils nafta Latvia Phone: Fax: E-mail: Internet: ISIN: LV0000999001 WKN: End of News DGAP News-Service ---------------------------------------------------------------------------
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