Russia's Government urged to sell Whitefish Harvester ATF at public Auction

July 22, 2012 19:07

A number of Mps of Russia's Duma (Lower House) have asked First Vice-Premier Igor Shuvalov to oversee the privatization of Arkhangelsk Trawl Fleet, a company with 20 fishing vessels and large cod and haddock quotas and sell the last government-owned giant at public auction rather than by closed tender, reports with reference to Kommersant.

The parliamentarians say that, though they do not contest the right of the government to sell separate assets, an auction would yield the best revenue for the state and would be more transparent. Meanwhile Gazprombank has been reportedly appointed as the government's agent for prequalification and sale of ATF by tender.

According to SPARK, in 2011 Arkhangelsk Trawl Fleet had a total sales revenue of RR2.69 billion (ca.USD85 million) while the net loss amounted to RR7.13 million (ca USD 220 000).

One of the main contenders for AFT is Russian Sea Group but there are also other Russian companies interested who think that a public auction would be the fairest solution.

A tender with prequalification by Gazprombank does not provide for transparency and creates advantages for trading companies without experience in the fishing business, representatives of Northwest Fishing Company (Russian acronym SZRK) and the North-West Fishermen Association are quoted as saying.

The initial appraisal of ATF made in summer 2011 has put the value of the company at RR1.2 billion (ca USD37 million), a figure twice as small as the annual turnover of the operation. In fact, the combine's main assets are its large quotas of cod and haddock and they must surely be considered when making the appraisal. Russia's Federal Fisheries Agency believes that the right appraisal value would be around RR4.6 billion (ca USD 144 million).

Some lawyers believe that arranging the sale the government may run into a legal collision as ATF is a strategic asset not to be sold to foreign companies or companies with a foreign share in the capital. Meanwhile though its main owners are ethnic Russians, the Russian Sea Group is formally owned by offshore interests falling under the foreign ownership category. This means, according to the lawyers, that the government must either stipulate special access rights for foreigners in case of a public auction or must conduct a closed tender with no admission for foreign bidders.

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