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IDS Borjomi Owner Ready to Transfer Part of Shares to Georgian Government Free of Charge

By Natalia Kochiashvili
Friday, May 20, 2022
IDS Borjomi International has issued a statement stating that after negotiations with the Georgian government, its controlling company has submitted a formal proposal to the Georgian government to transfer part of the shares free of charge, which will enable the Georgian government to participate in the management of an international company.

“Due to the recent negative developments in the region, IDS BORJOMI International is experiencing business interruptions and difficulties with banking services, which has forced the company to suspend production at bottling plants in the city of Borjomi. As a result, more than a thousand people were at risk of losing their jobs. If the Government of Georgia approves the offer of the company that owns IDS BORJOMI International, IDS Borjomi Georgia will be able to resume production processes and resume economic activities in the factories,” the company said in a statement, not specifying the percentage of offered shares.

The reason was the sanctioning of the company's shareholder, Russian billionaire businessman Mikhail Friedman, due to which the accounts of Borjomi were frozen. Both Borjomi bottling plants have been suspended since April 29 due to sanctions imposed on Russia.

49 employees were fired from the factory. Up to 1000 employees are in the process of mediation with the company's management. The company offered them a change in the terms of their contracts, arguing for the crisis, which most of the employees intended to sign only if they received guarantees that they would return to the old contracts after the company resumed operations.

The Ministry of Economy and Sustainable Development confirms the offer received from the company and states that they are studying the proposal, later they will submit the terms of the proposal to the Ministry of Justice, and only after that the information will be made public.

On April 29, Mamuka Khazaradze, the founder of the Lelo party and one of the former owners of the Borjomi bottling plant, appealed to the government to buy the shares of the Borjomi company from the Alpha Group, and then sell it to the Georgian Stock Exchange, arguing that only such steps can overcome the crisis and, at the same time, bring great stimulus to the formation of the capital market.

On April 30, PM Irakli Gharibashvili said that the population would hear ‘good news’ about Borjomi in the near future.

The director of IDS Borjomi Georgia is the former Minister of Finance Ivane Machavariani, who has been working as the director of the company since June 2021. The company employs about 1500 people.

‘Borjomi’ had several owners after the collapse of the Soviet Union. From 1995-to 2002 it was Mamuka Khazaradze ‘Georgian Glass and Mineral Water Company’. The next owner (2002-2012) was the company ‘Selfford’ of businessmen Badri Patarkatsishvili and Boris Berezovsky.

The main shareholder of IDS Borjomi International is the Russian ‘Alfa Group’ (Alfa Finance), founded by the sanctioned Russian billionaire Friedman. Alfa has owned a controlling stake in Borjomi since 2013 when a Russian holding bought a 60% stake in Badri Patarkatsishvili's family for $ 460 million.

Currently, IDS Borjomi International has a 60% stake in Alfa Group; The Patarkatsishvili family owns a 40% share. IDS Borjomi International is owned directly by the Cyprus-registered company Rissa Investments Limited (whose shareholders are Alpha Group and the Patarakatsishvili family).

IDS Borjomi International's assets include companies producing mineral and fresh water not only in Georgia but also in other countries. The company owns water bottling plants in the Ukrainian cities of Mirgorod and Morshin, which pour mineral water in Morshinsk. The company also owns one of Russia's leading freshwater brands, Ñâÿòîé èñòî÷íèê.

According to a document submitted to Reportal, IDS Borjomi Georgia had revenue of $119.7 mln in 2020 and a loss of $ 64.3 mln. In 2019, the company generated $140.17 mln, while its net profit was $17.3 mln. By countries, its 2020 revenue is distributed as follows: Russian Federation ($41.9 mln), Ukraine ($18 mln), Latvia, Estonia, and Lithuania ($14.3 mln), Kazakhstan ($13 mln); Georgia ($11 mln), Other countries ($21.1 mln).