vlad.tribnet.com / Issue #154 / Business / Reading article...

The Vladivostok Trade Port made steps toward becoming a larger player in the international market recently when shareholders agreed to increase its capital value by just under $10 million.

More than 70 percent of stock owners voted Nov. 5 to issue $9.8 million worth of new shares, which will bring the port’s capital to $39.3 million.

Funds from the stock issuance will pay for a number of projects, including an upgrade of the container terminal and construction of an oil storage facility. The port will also provide fuel and fresh water to incoming ships.

Such upgrading will cost over $100 million, and foreign underwriters stipulated that the port pay 10 percent of the costs. The new stock issuance will help port officials to pay these costs, as well as clear up lingering debts, they reported.

The vote’s outcome wasn’t clear until the last moment because the federal government, which owned 20 percent of the port’s shares before the new issuance, decided to vote against the measure.

The government was not interested in losing its market share in the port or paying more for new stocks.

But other shareholders overwhelmingly voted in favor of the new issuance, and the final result was 72 percent for, 27 percent against, and 1 percent abstaining. If the government had not been included in the vote, the proposition would have passed by 97 percent with a 57 percent turnout.

Shareholders agreed so overwhelmingly because the port management is eager, and prepared, to handle increased traffic and offer better competition to Nakhodka’s Vostochny Port.

“The port has meetings of the board regularly; their budgets are on international standards,” said Andrew Fox, Chairman of the port’s Board of Directors. “It seems quite reasonable if they want to expand, and we voted in favor of that.”

The port’s move makes it more attractive to a wide range of foreign investors, Fox said. First, its ability to manage a new issuance properly will give it a better profile.

In addition, the port’s increased size will attract investors with a higher spending limit.

“Some investors are not interested in buying shares worth $200,000 to $300,000 that you can typically get a hold of in the market,” Fox said.

“Now it’s possible for new shareholders to pick up a block of $1-2 million worth of shares.”

The port also hopes to attract foreign governments interested in supporting capital markets in Russia.

Many governmentally supported funds are created with the object of buying new shares, and port stock traders can lure them with the new issuance, officials reported.