The Ministry of Regional Development and Infrastructure of Georgia calls on Anaklia Development Consortium to submit a plan to the government on a replacement of Conti International LLC in shorter period of time.
“The only company from companies of the Anaklia Development Consortium, which meets the tender requirements announced by the Georgian government, was the U.S.-based Conti International LLC. Consequently, the Anaklia Development Consortium won the tender due to the Conti International's partnership with the Consortium.
Unfortunately, after the tender Conti International LLC was not involved in the implementation of the Anaklia Deep Sea project. Despite the fact that Conti International owns a 42% share of the Anaklia Development Consortium, it did not take part in project financing, in replenishing $ 120 million capital of the Anaklia Development Consortium and in the ongoing negotiations on fundraising.
All of this has led to serious doubts about the participation of Conti International LLC in the project, especially since the chairman of Conti International LLC, Kurt Conti officially left the Consortium Board on December 6, 2018.
It should be noted that the announcement about the leaving of Conti International LLC from the Anaklia Development Consortium made only after the Ministry’s formally address to all the founders of the Consortium, including Conti International LLC, to make greater support and involvement in addressing project financing challenges.
the Anaklia project cannot be implemented without experienced (in similar projects) and financially strong strategic investor, which is clearly illustrated by the example of the Anaklia Development Consortium.
Due to the absence of formal participation of Conti International LLC in the Anaklia Development Consortium and due to the absence of a real strategic investor from the very beginning, despite repeated postponement fundraising deadlines from 2017 up to date and despite unprecedented government support, the Anaklia Development Consortium has not yet raised its own capital, it has not yet presented guarantee the loans and cargo turnover to the banks, it has not yet reached an agreement with banks on loans.
Therefore, we call on the Anaklia Development Consortium to submit to the Georgian government a plan in a shorter period of time on a replacement of Conti International LLC (which owns a 42% share of the Anaklia Development Consortium) by a Western strategic investor with relevant experience and financial capacity”, reads the statement issued by the Ministry of Regional Development and Infrastructure of Georgia.
The U.S.-based Conti International LLC, one of the main partners of Anaklia deep sea port project, has decided to quit the Anaklia Development Consortium.
According to the Accent, lack of agreement between the government and the international financial institutions prompted Conti International to make this decision.
Later the Anaklia Development Consortium confirmed the information.
Commenting on the issue, Levan Akhvlediani, director general of the Consortium, told reporters on August 15 that Conti International has not made the decision on leaving the Consortium “today or yesterday” and that “talks about it were underway for a certain period of time.” He also noted that “this is not a pleasant fact, but nothing has happened that may critically harm the project.”
As for the reasons, he refused to make a comment on this issue.
Akhvlediani denied expert assessments, according to which Conti International’s decision means that the West will distance itself from the project, saying that the Consortium will further develop the project and bring it to the end.
The Anaklia Development Consortium was founded in 2014 and its 99.99% is owned by JSC Anaklia Holding, while 0.01% is the state property. Conti International owns a 42% share in Anaklia Holding; moreover, its founder, Kurt G. Conti served as the deputy chairman of the Holding’s supervisory board till December 2018.
The Anaklia Development Consortium (ADC), a joint venture of Conti International and TBC Holding founded by Mamuka Khazaradze, former chairman of TBC Bank’s supervisory board, was awarded the contract to build and operate the deep sea port in 2016; marine engineering works commenced in December 2017 and the first phase of construction ended last autumn. The government prolonged the term of attracting financial resources by the Anaklia Development Consortium till December 2019.
Developments around TBC Bank, including money-laundering allegations against its founder, Mamuka Khazaradze, earlier this year have brought the fate of the Anaklia project into question. Although the government officials have said the project would not be imperiled, the Anaklia Development Consortium claimed lack of clarity around TBC would impede finalizing of the pending agreements on funding with foreign lenders.
Mamuka Khazaradze and his deputy, Badri Japaridze announced about their plans to quit Anaklia Development Consortium’s Supervisory Board on July 26, after Tbilisi City Court ruled that the founder and former Board Chair of the TBC Bank, Mamuka Khazaradze and his Deputy Badri Japaridze had to post a GEL 700,000 bail each after being charged in a money laundering lawsuit.