Privatization

Since 1993, Frishberg & Partners has been involved in both large and small-scale privatization in Ukraine, including Commerzbank, Credit Commercial de France, ROBERT FLEMING & CO., to name a few. In all, we participated in privatization projects in the fields of soda production; cement production; cardboard manufacturing, electricity, among others.

Initially, we assisted a consortium headed by Sinclair Roche & Temperley, involving the corporatization, privatization and restructuring of UkrRichFlot (The Ukrainian River Fleet), a project financed by the European Bank for Reconstruction and Development. Our efforts in this regard included restructuring the enterprise as a holding company with numerous sub-units. Later, the EBRD asked our firm to create both a privatization plan and a corporate profile for a 7,000-employee, military-conversion enterprise with five production profiles, ranging from water pistols and cigarette lighters to electron microscopes and high-resolution optics.

The UK Know-How Fund selected our firm, along with Ernst & Young and Food & Agriculture International, to both privatize and restructure 10% of the wholesale and retail distribution of fruits and vegetables in the Kiev Region. As part of our engagement, we were required to interview the management at six state-run wholesale distribution warehouses, as well as the directors of over ninety retail produce shops. Ultimately, four distribution warehouses and forty retail shops were included in the project. Of these, four warehouses and thirty five shops were transferred from state to private ownership.

In order to successfully complete the British Know-How Fund project, our consortium developed two precedent-setting privatization methodologies and several creative valuation techniques, designed to promote worker participation in the privatization process both by extending the payment period and by reducing the overall value of the state-owned enterprise in question. Had we not implemented such innovative solutions, the project would not have been completed, and if it had, the level of worker participation would have been significantly less.

Frishberg & Partners also assisted in the development of mass privatization in Ukraine. We were asked by Price Waterhouse to advise on reconciliation of the U.S.AID’s vision of mass-scale privatization with the prevalent legislation. This led to a debate over share-splits in the context of the Ukrainian privatization certificate, as well as discussions concerning the choice of bearer versus non-bearer vouchers. Our work with Price Waterhouse resulted in the introduction and distribution of Ukrainian privatization certificates.