Vitol forced to hike offer to buy out Ventspils Nafta

By bne IntelliNews October 19, 2015

bne IntelliNews -


Oil trader Vitol Group has launched a mandatory bid for the outstanding 5.85% of shares in Latvian oil terminal operator Ventspils Nafta,  the target company announced on October 19. Once the offer is complete, Vitol - through Cyprus-based subsidiary Euromin Holdings - is likely to delist Ventspils Nafta.

However, Vitol insisted ahead of the offer that it was being forced into the move at a high price by the authorities, who appear angered by signs of insider trading in connection with the stock. The mandatory offer is connected Vitol's acquisition in September of a 43.25% stake in Ventspils Nafta.

Latvian financial watchdog FKTK has launched an investigation into a climb of over 70% in Ventspils Nafta's share price in the days immediately ahead of that transaction, which made the small Latvian company the world's top performing stock. A spike that started on September 10 pushed the share price up 195% to just above €3 by the end of the month.

The acquisition enabled Vitol - which is speculated to have strong Russian connections - to take control of Ventspils Nafta with 92.25%, as well as gaining indirect control over several Latvian enterprises. They include Ventspils Nafta's terminals - the largest crude oil and petroleum product terminals in the Baltics - and LatRosTrans, the largest Latvian-Russian joint venture in the Baltics. Ventspils Nafta also owns 49% in Latvian shipping company Latvijas Kugnieciba.

Vitol has since increased its stake to 94.15%. The mandatory offer will run to November 17. The price for one share is set at €4.56. Ventspils Nafta shares had gained over 45% to meet the offer price on the Nasdaq Riga by mid-morning trade on October 19.

The company complains the regulator is forcing it to offer an unfair price. On October 16, Euromin Holdings said in a market filing that the mandatory offer does not correctly value the assets owned by the Latvian oil terminal operator. The company had originally planned to offer €3.12 per share, according to the prospectus. The shares had been trading around that level since late September.

“Euromin is obliged to make the mandatory offer, but cannot do so other than on the basis of a share price approved by Financial and Capital Market Commission (FCMC), based on its calculation," the statement reads. "Euromin has informed JSC Ventspils Nafta that this repeated and conditional offer has therefore been made under pressure, against the prospect that Euromin’s legitimate shareholder rights would otherwise be suspended."

The forced price suggests the Latvian regulator is taking a very dim view of the shenanigans surrounding the company, as hinted by Ventspils Nafta CEO Robert Kirkup. “We are dealing with the local market regulators on our mandatory bid. This is proving to be more difficult and contentious than one would hope," he told bne Intellinews on October 13.

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