Merko the exception that proves the rule

Aug 06, 2008
By Mike Collier

TALLINN - The Tallinn Stock Exchange (TSE) has given the go-ahead to AS Merko Ehitus to become a listed company, despite the fact that, technically, it failed to meet normal criteria.

Anyone who thought the construction company Merko was already listed can be forgiven for their error, as the new application submitted to TSE comes at the end of a complex legal scheme designed to protect the formerly-listed company from potential liabilities as a result of the so-called "land swap" case.

As previously reported by TBT, the business name of construction firm AS Merko Ehitus was changed to AS Järvevana in the Estonian Commercial Register as of August 1st. 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.

A new company has been formed named AS Merko Ehitus. The business of the former AS 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" according to the company.

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. AS Merko Ehitus filed a new listing application on July 29, 2008 together with the draft listing prospectus and other appertaining documents for listing its shares in the Main List of TSE.

Then on August 5th, TSE's committee gave it the thumbs up, "Proceeding from the fact that AS Merko Ehitus has existed less than three years but it has been established as a result of division from a listed company and it has acquired units that have been operating for more than three years."

The committee said it was willing to "make an exception from the requirements of the Listing Rules clause 6.2 on duration of activities. And also to make an exception from the requirements of the Listing Rules clause 6.3 on submitting the audited annual reports for the three preceding financial years."

As a result of the committee's decision, the first listing day of AS Merko Ehitus will be August 11, 2008.



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