Source of dividends to be paid by Lithuania’s Litgrid still unknown

Litgrid would not disclose where it would obtain the funds for the largest dividends ever paid by a state-owned company. BNS could not contact either Arvydas Darulis, Litgrid chairman and Energy Deputy Minister, or Virgilijus Poderys, Litgrid CEO.

Litgrid’s spokeswoman Laura Šebekienė would not tell BNS on Thursday how the company would generate funds for dividends.

Vytautas Plunksnis, chairman of the board of the Lithuanian Investors’ Association, told BNS that the payment of dividends with the funds borrowed from banks should not be considered entirely wrong.

“Most state-owned companies use ineffective capital structure. It is dominated by equity which is more expensive than borrowed capital,” Plunksnis said.

He did not rule out that Litgrid would pay in cash only part of the dividends and the remaining amount payable to Visagino Atominė Elektrinė (Visaginas Nuclear Power Plant, or VAE), Litgrid’s key single shareholder, would be recorded as a loan.

“Thus VAE, as the loan provider, could get both dividends and income on financial and investment activities in the form of loan interest,” Plunksnis said.

The shareholders of Litgrid, which suffered a net loss of 20.324 million litas last year, on Monday decided to pay 390.857 million litas, or 0.775 litas per share, in dividends. The total amount of dividends slightly exceeds the company’s last year revenues, which totaled 388.944 million litas.

Litgrid group held 201.8 million litas in cash, cash equivalents and short-term deposits and investments at the end of 2011, it said in its 2011 report.

The group had no liabilities to banks at the end of December.

VAE owns 97.5 percent of Litgrid, which is quoted on the Secondary List of the NASDAQ OMX Vilnius Stock Exchange.