Instead the company is to focus on attracting specific, large investors to finance the expansion of its furniture factory.
The subscription period was initially planned for Aug. 21 until Sept. 10, but due to steep falls on equity markets and increased volatility in share prices the issue was at first extended until Oct. 1 before being canceled entirely on Sept. 28.
According to Toivo Kuldmae, development director at Viisnurk, the issue was canceled after the emergence of a number of serious investors who were interested in acquiring bigger stakes than those on offer.
"Despite the cancellation, Viisnurk will continue to implement its expansion plans, taking into consideration changing conditions in the external environment," said Kristel Kivinurm, director of Trigon Markets, which was to organize the issue. "The cancellation will have no impact on the company's day-to-day economic activities," he continued.
Viisnurk intended to issue 850,000 shares at 44 kroons ($ 2.59) each, slightly higher than the price of its existing shares at the time of the issue. A sale would have increased the company's share capital by 16 percent to 53.49 million kroons.
Viisnurk (meaning "pentagon" in Estonian) produces a quarter of the world's cross-country skis. In the year 2000 its ski factory produced over 300,000 pairs of cross-country skis and about 40,000 hockey sticks.
Its skis are mostly exported to Finland, Austria, Norway and North America under such brand names as Karhu, Peltonen, Jarvinen, Rossignoli, Atomic, Intersport and Madshusi.
Due to unfavorable weather conditions the ski market has declined in recent years, but because hockey is mostly played indoors, demand for the company's hockey sticks has increased. They will shortly be used by teams in the National Hockey League, though under a different trade mark.
"We've been engaged in hockey stick production for two years and reached the top level very fast," said Kuldmae. "In the future we plan to market our production more under our own trademark."
As well as increasing its share of the Baltic states' furniture market the company hopes to use the money raised at the share issue to boost hockey stick production.
Although Viisnurk's stock is of a low liquidity, analysts believe the company will grow substantially in the long term. It ended the first half of 2001 with net sales of 144 million kroons, 18 percent higher than last year, and a net profit of 18.5 million - 35 higher than last year.
"The company is fundamentally in a good sector," said Urmas Riiel, analyst at Hansabank Markets. "Employment conditions and the climate in Estonia are very advantageous for Viisnurk."
Kivinurm said that Viisnurk had one of the best growth potentials among companies listed on the Tallinn Stock Exchange.
"It has continuously increased its turnover and maintained good margins. The company's management has started new development projects, which are well planned. They have a good and motivated management and with its investor web site, Viisnurk is also one of Estonia's most investor friendly companies. Furniture sales will continue to be behind the company's rapid growth."
The company's major investors are Baltic Republic Fund, with a 59 percent stake, and Merita Bank, whose clients control 11 percent.
A number of investors are thought to be interested in buying the Baltic Republic Fund stake.
Kuldmae said the company was planning to focus on its four major business units, including furniture and to outsource technical services and heat energy production.
Only a small part of the company's furniture production is sold in Estonia, while its biggest export markets are Sweden, Finland and Germany. In the first half of 2001 Viisnurk's furniture factory made a 13 million kroon profit on a 77 million kroon turnover.
The sales of the softboard factory amounted to 38 million kroons in the same period, while the ski factory's turnover reached 16 million kroons during the first half of 2001, 8 percent less than the previous year.
The fourth major business is the new wood panels factory, which cost about 100 million kroons to the company.
Hansabank Markets predicts a 385 million kroon turnover and a 42 million kroon profit for Viisnurk in 2001, while Trigon Markets estimates its turnover will be 354 million kroons and its net profit 35 million.