Old bond holders ask for money back

TALLINN (ETA) - Holders of bonds that were issued by the pre-war Republic of Estonia in 1927 and have not been redeemed are going to form a committee and take the state to court to get back up to 250 million kroons from the present Republic of Estonia, the business daily Aripaev reported Nov. 6.

American bond holder William T. Hardison, from Florida, said the claims are being consolidated at present. The aim is to take the case to court, he wrote in an ad published in a recent issue of The Economist.

In 1927, Estonia issued bonds worth £700,000 and $4 million in order to carry out national monetary reform.

In accordance with the present exchange rate, the nominal value of the bonds is 91.4 million kroons. The interest rate on the bonds was 7 percent and they matured in 1967.

Together with the accrued interest earnings, the state of Estonia will have to spend some 250 million kroons on the redemption of the bonds.

"If the present Republic of Estonia declares it's the legal successor of the prewar Republic of Estonia, it also has to recognize its liabilities," Hardison said.

Alar Urm, head of the Finance Ministry's legal department, said that no concrete decision has been made yet as for the redemption of these particular bonds. Nor has any bond holder raised any concrete demands. Urm, however, admitted that in response to inquiries, the ministry has expressed refusal to redeem the bonds. Urm added that should any bond holder raise a concrete monetary demand, the ministry will discuss it. Finance Minister Siim Kallas has said the money will be paid if there are sufficient legal grounds to do so.