RIGA - A buy-out proposal submitted to the government by Lattelecom's management and staff calls for an investment fund to acquire ownership of all the telecommunication company's outstanding stock by the end of September. As Vincent Le Stradic, an executive at Lazard, which has been contracted by Lattelecom management to assist the privatization, told the Dienas Bizness daily on May 25, "Knowing the structure of Lattelecom and Latvijas Mobilais Telefons, the steps are simple."
In the first step, he explained, a new investor would acquire 100 percent of Lattelecom, and in the second TeliaSonera would purchase LMT, Latvia's leading mobile phone firm.
"And when we speak about management buyout, it does not mean that the management actually buys Lattelecom, but that the management finds an investor," Le Stradic explained.
He said that if the transactions were approved, investment advisers would need two weeks to work out an action plan, and then a month to prepare reports for potential investors. "If we start in early June, the deal might be completed by the end of September," he said.
Asked about how cooperation between Lazard and Lattelecom began, Le Stradic said that the consulting company worked with Denmark's TDC telecommunications company when it sold the Bite mobile operator.
"We had talks on Bite, as Lattelecom was interested in buying it. However, it was not easy due to the structure of shareholders," he said.
In early May a government-established task force backed a proposal to sell the state's 51 percent stake in Lattelecom and another 49 percent stake belonging to TeliaSonera for a reported 290 million lats (413 million euros).
The final decision rests with the Cabinet of Ministers, which has been seen dragging its feet on the issue though may now be keen to proceed in order to boost the state budget, which the government is under pressure to balance.
Last year TeliaSonera, which is Scandinavian-owned, offered to buy the state's majority stake in Lattelecom and 28 percent in LMT. TeliaSonera executives have long wanted to take over the Baltic state's biggest telecommunication firms.
However, fearing a monopolistic outcome, the state rejected the idea.
TeliaSonera currently holds 49 percent of LMT, while Lattelecom owns 23 percent in LMT and another 28 percent indirectly.
