Eesti Energia withdraws IPO plan

TALLINN - The Estonian government decided at its May 13 evening cabinet meeting that the State will invest its own money in state-owned energy producer Eesti Energia’s share capital, and will not hold an initial public offering (IPO) that would have listed a part of the company at the bourse, reports Postimees Online. “Organizing an Eesti Energia (public) share issue requires supplementing laws, so as to protect the State’s strategic interests,” said Prime Minister Andrus Ansip.

The investment plan of Eesti Energia includes a number of administrative risks, Ansip said. He meant the possible price of greenhouse gas quotas and European Commission’s permission for state aid to support building a new oil shale-powered power station, but also the allowed mining volumes of oil shale.
The government did not decide the timeline of increasing the share capital nor the exact amount of investments.
Economy Minister Juhan Parts had wanted Eesti Energia to attract additional capital by issuing new shares at the bourse, with a listing of up to a third of the firm. Initially, the plan was to sell up to 500 million euros’ worth of new shares, which would have taken place already in June.

Parts says that the government’s decision enables the company to achieve new power station contracts already this autumn. “The most important thing is that with the help of the investment program decided upon, we will be able to produce electricity in the coming decades. At the moment we are ready to invest taxpayer money in it,” said Parts.
He noted that, looking at the needs of the economy more broadly, the ability of the government to include private capital in the energy sphere would have been an additional bonus. “We didn’t reject bourse-listing. There is no consensus in regard to that option now, but the level of preparations enables us to return to that issue in 2011,” said Parts. The minister noted that he would have continued with the bourse plan. “The economy needs to seek more powerful access to international capital markets.”

It is estimated that the energy firm needs around 7.5 billion kroons (480 million euros) of extra finances to carry out its major investment plans.