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Last updated: 16:58 - 16 Feb.'18
Greenoak Buys Georgian Shipping Co. for $107 mln
/ 20 Dec.'04 / 16:21
Giorgi Sepashvili, Tea Gularidze, Civil Georgia

The Georgian Ocean Shipping Co. has a total
debt of USD 72 million.

The Georgian government signed its largest-ever privatization deal with the Greenoak Group, a major investor company in Georgia, to sell the Georgian Ocean Shipping Company for USD 107 million.

The agreement, signed on December 17 by Georgian Prime Minister Zurab Zhvania and Jan Bonde Nielsen, who is the major shareholder and chairman of the Greenoak Group, is a preliminary one; however, the Greenoak Group expects the transaction to be closed early in the New Year.

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.

The deal also envisages an agreement with the Georgian government over the joint operation of the Oil Pier adjacent to the Batumi Oil Terminal. The latter is also owned by the Greenoak Group.

Incoming Georgian Economy Minister Lexo Alexishvili says that a joint venture, with the participation of the Georgian government and the Greenoak, will be set up, which will be in charge of operation of the three piers adjacent to the Batumi Oil Terminal. Greenoak will have controlling shares of this joint venture, while the Georgian side will own 49% of the shares.

Alexishvili says that Georgia “will have guaranteed income of USD 7 million per year” from this joint venture.

“This kind of sale has never occurred before in the history of Georgian privatization.  Legal experts will finalize the agreement in the coming days and the Shipping Company will be sold to the Greenoak Group,” Georgian Prime Minister Zurab Zhvania said in a live interview to the Tbilisi-based Mze television on December 18.

“Some three months ago, other investors offered only USD 30 million for the Shipping Company, but then we preferred to wait,” he added.

One of the stipulations of the agreement is that the Greenoak should not fire any of the current staff of the Shipping Company.

"We have made it clear to Greenoak that they must make sure that every crew member currently employed by Ocean Shipping Co. remains employed. We have also made sure that the existing income stream to the state budget of Georgia from the Batumi Oil Pier operation will at least stay the same, with the potential to grow,” Zurab Zhvania said on December 17 after signing the agreement.

The Batumi Oil Terminal trans-ships crude
oil and oil products exported by Kazakhstan,
Azerbaijan, Uzbekistan and Turkmenistan.
Greenoak photo

The Greenoak Group is one of the major investors in Georgia, whose activities range from oil transportation and storage, as well as textiles industry to power supply. In Georgia the company mainly operates in the Adjara Autonomous Region.

According to the Greenoak Group, the company has invested about USD 100 million in Adjara since 1999, when it purchased the Batumi Oil Terminal. The Georgian daily 24 Hours reports that the Batumi Oil Terminal was privatized for 8.8 million Lari, during Aslan Abashidze’s reign as head of the region, hence bypassing the central authorities of Georgia.

However, according to Greenoak, the company has invested USD 60 million to modernize the Batumi Oil Terminal, which trans-ships crude oil and oil products exported by Kazakhstan, Azerbaijan, Uzbekistan and Turkmenistan.

The Greenoak Group also owns the textile factory Batumitex in Batumi and a tugboat service company, also based in the capital of the Adjara Autonomous Republic.

The company has also invested in the construction of a power plant with a total capacity of 60 MW in Kobuleti, also in the Adjara Autonomous Republic.

Relations between the Greenoak Group and Georgia’s new authorities were strained, especially during the standoff between the central authorities and ex-leader of Adjara Autonomous Republic Aslan Abashidze, who was forced to resign in May, 2004. The company always enjoyed good relations with the ex-Adjarian leader.

A press release, issued by the Greenoak Group after the signing of an agreement, reads that “an agreement has been reached with the Government of Georgia to settle all outstanding issues between the Government and the owners of Batumi Oil Terminal.”

The Prime Minister Zurab Zhvania was prompted to respond by saying that “it is nice to see that a company which had experience with the old government is ready to work in the new Georgia."

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