Lithuania's Klaipedos Nafta set to issue new shares

VILNIUS (BNS) - Lithuania's Klaipedos Nafta, the operator of the

Klaipeda-based oil product terminal, plans to place a new share issue with a view of solving two long-standing problems.

Klaipedos Nafta's shareholders will be asked to approve a new share issue of up to 80 million litas ($20 million) on March 29. The company's authorized capital will increase to 322 million litas following the placement.

The company wants to raise money to complete the long-delayed reconstruction of the terminal. It has failed to borrow around 20 million litas needed for this purpose from banks.

If successfully placed, the new share issue would help to unravel another major problem.

Oil terminal Naftos Terminalas, Klaipedos Nafta's majority shareholder, failed to carry through its offer to buy shares from minority shareholders last year.

Reliable sources have told BNS that Klaipedos Nafta plans to use funds raised through the issue to pay 38 million litas in loans back to Naftos Terminalas so that the state-owned holding company could settle up with other shareholders.

Neither the government nor Naftos Terminalas will participate in the new issue, therefore the holding company's stake in Klaipedos Nafta, currently amounting to 68.7 percent, will shrink after the placement. It will be able to increase its shareholding by buying shares from other shareholders later.

Almost all of Klaipedos Nafta's minority shareholders opted to withdraw after the state gained control of the company last spring, including Osman Trading, Woodison Trading, Ferrous Investment, Dilan Trading and Lancaster Distral.