TALLINN - Estonian construction giant Merko has split itself into two parts in an elaborate legal maneuver aimed at protecting its core business from the threat of huge punitive fines.
The business name of construction firm AS Merko Ehitus was changed to AS Järvevana in the Estonian Commercial Register as of August 1, 2008, according to a statement issued on the Tallinn Stock Exchange (TSE). The change has also been made to the TSE trading system. 17,700,000 shares of AS Järvevana were traded on the Tallinn Stock Exchange Main List under a new shortname JRV1T as of Monday, August 4, 2008.
According to the division plan, the business name of the previously listed company has been changed to AS Järvevana and a new company has been formed named AS Merko Ehitus. The business of the former AS Merko Ehitus, (i.e. all assets, liabilities and contracts, including equity interest in other companies, as well as the business name of "Merko Ehitus") now belongs to the new AS Merko Ehitus, "except for the liquid assets to the amount of the maximum possible outcome of the criminal proceedings in the so-called land swap case and contingent liabilities related to the proceedings" the company stated.
Those potential liabilities now belong to AS Järvevana, which will have to be responsible for fines of up to EEK 250 million (EUR 16m) if the courts rule that Merko was guilty of bribing officials and conducting dodgy land deals in protected areas.
On the other hand, if Merko is cleared, investors brave enough to buy into AS Jarvevana could find themselves making a tidy profit.
A prospectus for the 'new' AS Merko Ehitus will be published next week, subject to the approval of the Estonian Financial Supervision Authority.
