Borjomi Owners Offer Free Shares to Georgian Govt

Russian-owned IDS Borjomi, producing Georgia’s iconic mineral water, has offered the Georgian Government to transfer part of its shares free of charge, after the company was forced to shut down operations following international sanctions against Russia over invading Ukraine.

The offer, albeit largely unspecific, comes amidst employment concerns by Georgians working in Borjomi at the factory, some of whom already lost their jobs after failing to come to an agreement regarding remuneration during the shutdown.

The company announced the suspension of production on April 29 and cited restricted access to its foreign currency revenues and trouble to settle with creditors. 

At the time, the labor union appealed to the Ministry of IDPs from the Occupied Territories, Labor, Health, and Social Affairs to mediate between workers and management.

On April 30, the Prime Minister of Georgia, Irakli Garibashvili vowed to provide the public with some “pleasant information” about the fate of Borjomi, without providing further details.

The IDS Borjomi Georgia is a subsidiary of IDS Borjomi International, registered in Curacao, in the Dutch Caribbean, an offshore tax haven.

Since 2013, the Russian Alfa Group has held a majority stake — 60% — in the IDS Borjomi International. The Group was co-founded by Mikhail Fridman, a Russian-Israeli tycoon. Alfa Group’s subsidiary, Alfa-Bank, the largest private-owned Bank in Russia has been hit with sanctions from the U.S. and the UK over the war in Ukraine.

Economy Minister Talks Negotiations

Economic Minister Levan Davitashvili spoke to journalists on May 17, explaining that the government is working closely with relevant parties to resolve the issues facing the company.

“…We have been working with auctioneers to make specific changes so the company will not be the subject of sanctions,” Minister Davitashvili said.

He also noted that the Georgian authorities are working with international regulators whose sanctions affect the company, as well as financial institutions, and international partners to ensure the “transparency” of the process.

“I hope that already in a few days we will be able to make certain changes happen which will give the company the chance to resume operations,” the Economy Minister concluded.

Roman Gotsiridze, opposition United National Movement MP, expressed concerns about the transparency of the process in a Facebook post yesterday. MP Gotsiridze asked why the sanctioned majority shareholder would not sell their shares to the Patarkatsishvili family, which owns the remaining stakes, instead of the government, among others.

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