TALLINN - Edward Burkhardt, chairman of the supervisory board of the Eesti Raudtee (Estonian Railway), has admitted that while negotiations with two investors on selling a majority stake in the railway continue, the company's ongoing dispute with the state could undermine any deal.
In an interview published in the Eesti Paevaleht daily, Burkhardt said that two companies were still negotiating with Baltic Rail Services, a private firm that owns the majority stake in Estonian Railway, though there had been a third that has since dropped out. He refused to say whether the drop-out was one of the two Russian bidders 's Prominvestors and Transgroup Invest 's or Germany's Deutsche Bahn.
Burkhardt said the offers by the two remaining bidders were acceptable to Baltic Rail Services. "Negotiations are now going on about other terms," he said.
Still, Burkhardt said the sale might fail if no concrete deal is hammered out by the end of the year. Right now the main obstacle, he added, is the ongoing row with the government.
"Maybe some party, which will buy our shareholding, has a better plan of how to settle differences with the government," he said.
He explained that Baltic Rail Services, which is owned by a group of American and Estonian investors, would not sell the rail company just to be rid of the asset 's which has caused investors no small amount of grief in the past year. In the absence of a good offer, the majority shares may not be sold at all, the chairman of the supervisory board of BRS said.
Burkhardt, who has faulted Transport Minister Edgar Savisaar for the animosity between the state and Estonian Railway, said that he was ready to keep his interest in the railway for years to come.
In the meantime, the government is still intent on canceling the privatization agreement, under which 66 percent of Estonian Railway was sold to BRS in 2001. Economy Ministry officials have accused Burkhardt and BNS of not meeting its investment obligations, a position that was subsequently supported by the Cabinet of Ministers.
BRS has been seeking to sell its stake in the Estonian rail company for almost a year now and wishes to receive some 2.5 billion kroons (160 million euros) for the asset. The state offered just 2.1 billion kroons, which the company refused to accept.