TALLINN - The listed Estonian shipper Tallink Grupp and Infortar, an investment company majority owned by Estonian businessmen Ain Hanschmidt, Enn Pant and Kalev Jarvelill, are to sign a memorandum of understanding with the City of Tallinn regarding the reconstruction of the Linnahall arena for some 300 million euros.
The shared vision of the parties is to construct a conference and concert center at the venue along with a passenger terminal, hotel, business center and leisure facilities, Tallink Grupp told the stock exchange.
The construction works will be carried out within three years from the acquisition of the necessary permits, and the project cost is estimated to total around 300 million euros.
Mayor of Tallinn Mihhail Kolvart said at a press conference on Wednesday that the Linnahall arena will be reconstructed to house an up to 5,000-seat conference and concert center along with various halls. A Tallink passenger terminal and the relevant infrastructure will be constructed behind the arena.
A business center housing a hotel, restaurants, cafes and various leisure facilities will also be built at the venue, Kolvart said. Traffic will partially be directed underground.
As the next step, a joint enterprise will be created in which the City of Tallinn will have a shareholding of 34 percent and Tallink and Infortar will own 33 percent each, the Tallinn mayor said.
CEO of Tallink Grupp Paavo Nogene said that the renovated venue is expected to attract over 10 million visitors per year.
Upon the creation of a joint enterprise, shareholders will make a combined initial contribution of one million euros to the project in proportion with their shareholding percentage. Contribution by the City of Tallinn will total 340,000 euros. The city is not planning to invest any more of taxpayer money in the project.
When the permits required for the realization of the project have been acquired and all other prerequisites have been met, the city will contribute to the joint venture the Linnahall arena and the adjoining properties while Tallink and Infortar are to contribute 10 million euros each.
The city of Tallinn will have no further financial obligations with regard to the project and the funds required for the investment will be raised by Tallink and Infortar. The project, which will be financed from equity and other financial instruments, will not yield any profit prior to its completion and start of business activities.
The CEO of Tallink said at the press conference that the new project will not change Tallink's dividend policy.
The Nasdaq Tallinn stock exchange temporarily halted trading in the shares of AS Tallink Grupp at noon on Wednesday in relation to imminent disclosure of important information. The stock exchange will notify of the resumption of trading in Tallink shares in a separate announcement.
Tallink shares were traded at 0.942 euros on the Tallinn stock exchange at noon.