TALLINN - On Nov. 21 the Harju County Court arrested the assets of AS Kalev in order to facilitate a claim by Alta Capital Partners, which hopes to retrieve a 93.9 million kroon (6 million euro) advance payment made earlier this year.
The down payment was made by Alta Foods 's a subsidiary of Alta Capital Partners, a pan-Baltic private equity firm 's in spring this year as part of now collapsed takeover agreements. Alta Foods has now demanded that, in accordance with the Stockholm arbitration institution, Kalev repays the sum with interest and a fine for delays.
Alta Foods simultaneously filed an application to freeze Kalev's assets. Harju County Court ruled in favor of Alta's request and has consequently attached the shares of Kalev's profit generating subsidiaries 's including Kalev Chocolate Factory and dairy company Kalev Paide Tootmine.
The crux of Alta's argument is based on an equity purchase and sale agreement with Kalev that permits Alta to unilaterally back out of agreements in the case of dramatic deterioration of the financial markets. In this instance the party backing out of the agreement has no obligation to make compensations, since external market influences are the determining factor, Alta said.
"The heart of the dispute is that while people from Kalev claim that nothing extraordinary has happened on the market and the deal should have gone forward, our position is that the events that unfolded in the first and second quarter had a significant impact [on the deal]," said Anton Sigal, Alta Capital Partners' lawyer.
Kalev, which is owned and controlled by businessman Oliver Kruuda, has rejected Alta's repayment claims. According to Allan Viirma, head of Kalev's legal department, Kalev is under no obligation to return the prepayments made by Alta earlier in the year.
Furthermore, Kalev is planning to contest the court's decision to arrest the shares of its subsidiaries. The company argued that regardless of Alta's validity, the size of their claim is grossly disproportionate to the burden inflicted by the court's freezing of company assets.
Kalev said that prior to making their ruling the Harju County Court only had access to information provided by Alta Foods, and claimed that this was insufficient evidence.
Kalev also said that it would demand in court that Alta Foods guarantee compensation for all possible damages incurred by the complaint it has filed 's including the obstructions to daily business caused by the court's arresting of shares in its subsidiaries.
Analysts at Estonian business newspaper Aripaev have suggested that if the court's final verdict supports Alta Foods' claim, Kalev assets might tumble by 300 to 400 million kroons (19 to 25.5 million euros), as their balance sheet factors in a large compensation claim filed against Alta Capital Partners earlier in the year.
Last summer Kalev filed a 231.6 million kroon out-of-court claim for damages caused by Alta Foods' failure to execute the agreed sale contract of shares.
Under an agreement reached in September 2007, Alta Capital was to buy the food holdings of both the Kalev and Rubla companies for the sum of 880 million kroons. The two parties failed to finalize the transaction despite repeatedly extending negotiations, and in June Kalev affirmed the arrangements had fallen through.