JSC Ventspils Nafta (VN) has major concerns regarding the performance, management and strategy of AS ”Latvijas Kugnieciba” (LASCO)

The last two years have been an extraordinarily difficult period for the global
economy, the Latvian economy and world shipping markets. VN is profoundly
dissatisfied by the response of LASCO to these market conditions. 

VN is by far the largest shareholder of LASCO, with a shareholding of 49.94%
and has a legitimate role in helping deliver a recovery plan for LASCO, based
on the depth of international experience of VN's major shareholders. 

On February 9th, Ilva Purena (a senior employee of VN and a legitimately
elected member of the Management Board of LASCO) was dismissed from her
position at LASCO. As a consequence, and in contraventions of all principles of
corporate governance, LASCO's largest shareholders are now unrepresented in the
company's day to day management. 

Having lost the confidence of their legitimate shareholders, the LASCO
Supervisory Council must now justify their actions at a meeting of the
shareholders and face re-election. Over the last 2 months, VN have made a
series of formal requests to both the Management Board and the Supervisory
Council of  LASCO to convene a meeting of the shareholders for this purpose. 

Under Latvian law, the legitimate right of a shareholder with more than 5% of
the share capital to request the convocation of a shareholder meeting is
clearly recognised and stated. Each request made has been ignored by the
Management Board and the Supervisory Council of LASCO, contrary to the
provisions and spirit of the law. 

In line with their rights under the Commercial Law (clause 270 part 4), VN has
also approached the Latvian State Register of Enterprise, to request them to
convene a shareholders meeting of LASCO. The Register of Enterprise has also
declined to call a shareholder meeting. 

It  is alleged that this decision has been reached on the advice from the
Chairman of the Supervisory Council of LASCO that a shareholders meeting has
already been convened. Such a statement by the Chairman is clearly incorrect,
since neither the Supervisory Council nor the Management Board of LASCO have in
fact convened a shareholder meeting. No notice of a meeting of shareholders has
been given either to the shareholders themselves or to the Riga Stock Exchange,
where LASCO shares are listed and traded. The time and place where such a
meeting will take place remains unfixed. 
This is a state of affairs that the Register of Enterprises should have been
capable of determining prior to reaching their decision. If a meeting of the
shareholders had been convened, it would have been a matter of public record. 

Latvia's ability to uphold the rule of law, impose and regulate corporate
governance standards and ensure the effective, transparent operation of State
Institutions, such as the Register of Enterprises, are very important
indicators to the outside world. It is these issues that determine the
confidence of serious lenders and investors. In a globalised world economy,
Latvia needs to demonstrate that it can manage its affairs as well as all the
other leading economies in the EU. 

The failure by a major public company, and the government officials appointed
to oversee its regulation, to uphold and protect shareholders' lawful rights
does significant damage to the credibility of Latvia and is deeply unhelpful in
the current economic climate. 

VN, the largest shareholder in LASCO, continues to seeks the re-instatement of
Ilva Purena to the office of a member of the Management Board of LASCO . In
addition VN is requesting the Chief State Notary, K.Balodis to correct the
mistakes made to date by the Register of Enterprises and convene a
shareholders' meeting of LASCO, as requested by VN. 

Zane Bojāre
„Ventspils nafta” PR Manager
E-mail: zane.bojare@vnafta.lv
Phone: 67821691; 29706733