Georgia Expects at Least USD 200 mln from Selling Shipping Co. and Manganese Mining

Georgian Prime Minister Zurab Zhvania set January 18 as a deadline for finalizing separate talks with those companies, which proposed the most reasonable bids for privatizing Georgian Ocean Shipping Company and Chiaturmanganumi manganese mining enterprise/Vartsikhe hydro power plant.

“Privatization race was extremely successful, as there were more proposals, than we expected,” Prime Minister Zurab Zhvania said at a news conference on January 11, shortly after the deadline for submitting privatization bids expired.

He said that there are total of seven companies seeking to purchase 100% of shares of the Georgian Ocean Shipping Company. While four companies applied for a privatization package that includes Chiaturmanganumi, a manganese mining factory in Tchiatura and a Vartsikhe hydro power plant.

“The amount of money they [seven companies] are offering for the Ocean Shipping Company varies from USD 17 million to USD 117 million,” Prime Minister Zurab Zhvania said.

He said that three companies out of the seven bidding for Ocean Shipping Company are offering more than USD 100 million. “And [due to an uncompetitive bid] there is one obvious outsider company,” Zhvania added, however he did not specify the companies by names.

According to the Georgian Economy Ministry the companies bidding for Georgian Ocean Company are: Cyprus-based investment company Schoeller Holdings Ltd; the British Marine Capital Limited, which is the subsidiary firm of Aquamarine Shipping Consultants; the Australian  ASP Ship Management Pty Ltd; the Greenoak Group; Turkish company Koryat; Italian Co Arma and Russian company the Industrial Investors Group (Promyshlennye Investory). The latter’s co-owner is Sergey Generalov, who served as Russia’s Energy Minister from 1998–1999. The Russian company already controls Russia’s Far Eastern Shipping Company (Dalnevostochnoe Morskoe Parokhodstvo).

“Speculations that there was no need for contest started shortly after we signed a preliminary memorandum with one of the companies over the privatization of the Shipping Company, because the fate of the Shipping Company was already decided. But I want to tell you that competitor companies, which are ready to pay the same amount of money only for the Shipping Company, appeared,” the Georgian Prime Minister said.

Last December the Georgian government signed a preliminary agreement with the Greenoak Group over selling the Ocean Shipping Company and shares of three piers in Batumi port for USD 107 million.

“So this company [the Greenoak Group] has serious competitors now,” Zurab Zhvania added.

Currently, the Georgian government is the 100% shareholder of the Ocean Shipping Company, which owns 15 cargo ships and employs a staff of 700 people. However, the Georgian daily 24 Hours reported on December 20 that “13 of the 15 ships were used as collateral for one of the German-based banks.” According to the Georgian Economy Ministry the Ocean Shipping Co. currently has a total debt of USD 72 million.

At the news conference on January 11, Prime Minister Zurab Zhvania also spoke about the proposals submitted by a total of four companies for a privatization package which includes Chiaturmanganumi, a manganese mining factory in Tchiatura, and a Vartsikhe hydro power plant.

“The amount of money being offered by the companies for the Chiaturmanganumi alone varies from USD 47 million to USD 67 million. And amount of money offered for both [Chiaturmanganumi and Vartsikhe hydro power plant] varies from USD 85 million to USD 117 million,” the Georgian Prime Minister said.

“One company is offering USD 85 million for both enterprises, while the other three companies are ready to pay more than USD 100 million, so competition is also serious here,” he added; but again refrained from naming these companies.

According to the Georgian Economy Ministry these four companies are: Ukrainian Interpipe Corp.; Austrian DCM; Russian Evrazholding Group and Czech company Moravia-Georgia.

Reports say that Ukrainian Interpipe is among those companies offering more than USD 100 million for Chiaturmanganumi/Vartsikhe hydro power plant, particularly USD 117 million. In addition the company vows to invest USD 60 million in the enterprises in next three years in case of purchasing it. The Ukrainian giant Interpipe Corp. is owned by the influential tycoon Viktor Pinchuk, son-in-law of outgoing Ukrainian President Vladimir Kuchma.

The Austrian company DCM has already made a USD 10 million downpayment in an attempt to demonstrate its serious intentions over purchasing Chiaturmanganumi/Vartsikhe hydro power plant. But no exact amount of money offered by the Austrian company is known yet.
 
In 2003, DCM purchased a controlling stake in the Ferro-Alloy Plant in Zestaponi, which is also located in western Georgia.  The Zestaponi Ferro-Alloy Plant represents the biggest customer of Chiaturmanganumi’s products.

Georgian Prime Minister Zurab Zhvania said on January 11 that the government ceased talks with, as he put it, the “outsider companies.” He said that officials from the Economy Ministry will start separate talks with each of the companies which proposed reasonable bids.

“Individual talks with each of the company should be over by January 18,” he added.

Zurab Zhvania also said that those companies whose bids were most interesting for the Georgian government “should confirm their intentions over purchasing these enterprises by making a downpayment in the next two-three days.”