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Georgian Govt Receives 7.73% of Borjomi Shares

On June 13, Georgian Prime Minister Irakli Garibashvili announced the Georgian Government will receive shares in IDS Borjomi International, the company producing Georgia’s iconic mineral water, free of charge.

The deal means sanctions-hit Russian ownership will no longer possess the company’s majority shares, which should pave the way to the normal functioning of Borjomi bottling factories, disrupted since late April.

“Our state will become the co-owner of the Borjomi factory, our national treasure [and] pride,” PM Garibashvili noted at the government meeting. 

He addressed the company’s striking employees that “no citizen and no employee of Borjomi will be oppressed,” acknowledging that questions remain about how their problems will be solved. “Every problem that Borjomi and its employees had, in operating and running will be solved.”

The Prime Minister also said the deal was clinched in consultation with international partners,  including UK regulators, and standards.

Minister of Economy Explains Details

Minister of Economy Levan Davitashvili confirmed the deal in which the Government receives 1,104 shares amounting to 7.73% of IDS Borjomi International from Rissa Investment Limited, which is owned by the Erasmony Limited, ultimately owned by sanctioned Russian oligarch Mikhail Fridman and his Alfa Group.

According to Minister Davitashvili, the company’s shareholders will now be:

  • Erasmony Limited with 49.99%
  • Black Waters Limited (Patarkatsishvili family) — 38.48%
  • Georgian Government — 7.73%,
  • Minority Shareholders — 3.79%, owned by a former Borjomi employee and various shareholders. 
Georgia-based IDS Borjomi Georgia company is owned by IDS Borjomi International, registered in Curaçao, an offshore tax haven. For years, since 2013, 60% stake in the parent company belonged to Fridman’s Alfa Group, which gradually seemingly decreased to 57.72% (owned by Alfa’s Erasmony and Rissa). Alfa Group’s Alfa-Bank, the largest private financial institution in Russia, has been hit with sanctions amid Russia’s war against Ukraine.

Minister Davitashvili noted that as part of the deal, the state would be represented on the Board of Directors with 1 voting director and 1 observer director. The director, representing the state, will also be head of the board of directors, hence being in control of the deciding vote per the agreement. Erasmony Limited and Black Waters Limited will have two directors each. 

“The state can establish full control over the company,” the Minister went on, adding that it is probable for the second-largest group of non-sanctioned shareholders to delegate governing [functions] to the state representative, which is stipulated in the agreement”

Borjomi Strike Continues

The news follows several weeks of anticipation over the deal and a strike by some 400 workers at the factory since May 31.

The dissatisfied workers have been demanding the reinstatement of their 49 dismissed colleagues, payment of delayed salaries, forming a collective agreement with the employer, and for the company to stop “blackmailing and threatening” outspoken employees.

Troubles began on April 29, as the Russian-owned Georgian mineral water giant suspended work in both of its factories in Georgia’s Borjomi town over “difficult circumstances” surrounding Russia’s war in Ukraine.

IDS Borjomi Georgia then stressed that the already difficult situation in its key export destinations — presumably Russia and Ukraine — was compounded by restricted access to its bank accounts, “depriving the company of the possibility to receive [foreign] currency revenues and settle with creditors.”

This post is also available in: ქართული (Georgian) Русский (Russian)


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