"We have at least declined at the moment because we don't think investment incentives are attractive," said Leo Sorensen, chairman of House of Prince.
Janis Naglis, the outgoing head of the Latvian Privatization Agency, has said that the lack of interest on the part of House of Prince to buy into the land their production facilities sit on indicates the company lacks long-term investment interest in Riga.
But Sorensen disagrees.
"We have no plans to close the facilities," he said. "I just expressed concern about the investment climate in Latvia. The government doesn't seem particularly interested in attracting industrial investment."
Now the privatization agency isn't sure what they are going to do with the land.
"[House of Prince] has a factory there so it was logical that they would buy the property. But they're not so willing to expand their investment," said Guntis Karklins, a spokesman for the privatization agency.
"But we have to finally privatize Rigas Tabakas Fabrika. We have to do something with the property."
House of Prince first got involved with the Riga tobacco factory in 1991, when state-owned cigarette manufacturer ATF deteriorated toward bankruptcy.
ATF became Rigas Tabakas Fabrika and retained ownership of the land, while House of Prince, the Danish Investment Fund and the Latvian state formed House of Prince Riga.
With an investment of $10 million and a 45 percent stake in House of Prince Riga, the Danish company has upped production to three billion cigarettes a year for both the domestic and international markets.
Thirteen brands of cigarettes - including the popular Wall Street, Quattro and Elita brands - are produced at the Riga facility as well.
Then in May 2001, House of Prince injected another $2 million into HOP Riga, buying out the government's 49 percent stake in the company, Karklins said.
In the end, the real estate just isn't worth the investment.
"The value of the buildings has been based on their transformation into apartments," Sorensen said. "It isn't very realistic. They don't have any real value."