New York finance group to lead Latvia's 427 million euro telecom deal

  • 2007-09-19
  • By TBT staff
RIGA - The Blackstone Group, a financial services group based in New York, will lead the 427 million euro management buyout of Lattelecom, one of the largest deals in Latvian corporate history.
Vincent Le Stradic, head of  the European telecommunications department of Lazard, an international investment bank helping Lattelecom organize the buyout, told a press conference last week that, in accordance with the deal, Blackstone would take possession of 50.1 percent of the voting stock in the company, while Lattelecom employees would claim a 49.9 percent stake.
Currently the land-line phone operator is 51 percent owned by the state and 49 percent by TeliaSonera, the Scandinavian telecommunications company.

Nils Melngailis, CEO of Lattelecom, said that of the 300 million lats (427 million euros) needed to pull off the deal, approximately 200 million will come from a syndicate of banks, while Blackstone would front 90 million lats and company management and employees would have to invest 10 million lats.
The Blackstone proposal provides for the transaction to be funded by a consortium consisting of four banks 's Unicredit, DnB Nord, Nordea and Parex Bank.
Speaking of Blackstone, Melngailis said, "I think that with such a partner we have the most opportunities of reaching the aims we have attempted to achieve." He also said that the government and the telecommunication company would agree that Lattelecom could not be sold for an as yet unspecified period of time.

According to an agreement reached Aug. 20, Lattelecom management and employees will eventually acquire 100 percent of the company.
It is expected that by Sept. 24 all agreements for the deal will be concluded, and the transaction would take place by the end of the year.
In exchange for its stake in Lattelecom, TeliaSonera will acquire control over LMT, one of Latvia's largest mobile phone operators. It currently owns 49 percent of LMT's stock.
Transport Minister Ainars Slesers has been quoted as saying that the state budget could receive as much as 425 million lats as a result of the complex deal.

The Blackstone Group, founded in 1985, is one of the largest alternative asset managers and financial consultants in the world. Its assets as of late June 2007 totaled $91.8 billion.
The Lattelecom group, which comprises six companies, posted revenues of 143.7 million lats last year.