Gas utility shareholders approve split by April 2017

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The joint-stock company Latvijas Gaze's shareholders today approved launching reorganization of the company in accordance with the Energy Law, and completing the reorganization by April 3, 2017, reported LETA newswire Tuesday.

Latvijas Gaze CEO Aigars Kalvitis informed the shareholders that the company's council had decided to divide the group into two subsidiaries. Both will be joint-stock companies, each with its own assets and independent shareholders. One company will sell gas, the other will be in charge of gas storage and transmission.

Reorganization of Latvijas Gaze will not be a simple process, as every shareholder that cannot keep its share in the new gas storage and transmission company will have to consider selling its shares.

"All the shareholders that are associated with energy production will not be able to own shares in the transmission and storage company. Financial investors, on the other hand, may be represented at both companies. Therefore every shareholder will have to consider leaving one or the other company," said Kalvitis.

Following Latvijas Gaze shareholders' approval of reorganization of the company, Kalvitis said that the company's board would be overseeing the reorganization process, although Latvijas Gaze shareholders may have to vote on several individual matters. If there are no legal obstacles, reorganization of Latvijas Gaze could be complete by April 3, 2017, he believes.

As reported, the Energy Law's amendments for legalization of the natural gas market and breaking up Latvijas Gaze were promulgated on February 22. According to the amendments, Latvijas Gaze will become two companies by April 3, 2017, of which one will be in charge of the gas transmission and storage system, and the other will be responsible for natural gas distribution and sale. These two companies will have to become legally independent of each other by December 31, 2017.

LETA also reported, Latvijas Gaze posted EUR 30.5 million in net profit last year, according to the company's unaudited financial report. In 2014, Latvijas Gaze posted EUR 30.07 million in profit.

The year 2015 saw a substantial price drop in the global oil markets, with influence on both the average natural gas purchase price and the annual income of Latvijas Gaze, the company informs.

In 2015, consumers were sold natural gas and provided services for EUR 445 million, compared to EUR 503 million in 2014.

In 2015, Latvijas Gaze sold to the consumers 1.32 billion cubic meters of natural gas. In comparison with 2014 the amount of natural gas sales was two percent higher.

At the moment, the largest shareholder in Latvijas Gaze is Russia's Gazprom with 34 percent shares, followed by Marguerite Fund with 28.97 percent shares, Uniper Ruhrgas International GmbH with 18.26 percent shares, Itera Latvija with 16 percent shares, and 2.8 percent shares owned by smaller shareholders.

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