Lietuvos Telekomas gets giant loan

VILNIUS - Lietuvos Telekomas, one of Lithuania's biggest companies, signed an agreement with six foreign banks on Aug. 10 to pull in a $125 million loan. The amount makes the loan the biggest ever given to a private business in Lithuania.

With the flags of Sweden, Germany, Lithuania, Finland and the European Union providing the backdrop, representatives of six banks signed away the $125 million five-year term loan. The participating banks are Merita Bank, Swedbank, Leonia Corporate Bank, Dresdner Bank Luxembourg, Vereins-bank Riga and Nordic Investment Bank.

Lietuvos Telekomas plans to use the loan for investment projects and to pay off some previous loans.

"It is obvious today that Lietuvos Telekomas is considered as a serious company in the world of international business, also the state of Lithuania is being evaluated as a more serious country because of fast economic reforms [and its] wish to integrate itself into international political and economic organizations," Lietuvos Telekomas General Director Tapio Paarma said to start the signing ceremony.

A significant part of the ceremony consisted of speeches by some of the representatives of the banks providing the loan, the Swedish and German ambassadors to Lithuania, and Lietuvos Telekomas' finance department director.

Most speakers echoed the idea Paarma presented - that the sphere of telecommunications is important and that international interest in both Lietuvos Telekomas and Lithuania demonstrates that significant economic strides have been made in the country.

But according to Lietuvos Telekomas Finance Department Director, Jan-Erik Elserius, the process of getting the loan was not always smooth.

"The process was started a year ago, but because of the Russian crisis last fall it was delayed," said Elserius. "Irrespective of that, we managed to continue to work early in the spring and received proposals [from no] fewer than 16 banks and financial institutions to provide funding for our planned investment."

The loan comes just over a year after Lietuvos Telekomas was privatized. In June of 1998, a 60 percent stake in the company was sold for $510 million by the Lithuanian state to a consortium called Amber Tele-holdings, consisting of Fin-land's Sonera and Sweden's Telia.

As part of the deal, Lietuvos Telekomas was granted a monopoly position until 2002, which received a significant amount of criticism by some opposition political factions and a few NGOs like the Free Market Institute.

The privatization issue re-emerged again during Vice President of Swedbank Robert Charpentier's speech. In addition to expressing confidence in Lietuvos Telekomas, he also provided some biting comments about the privatization of telecommunication structures in other countries of Europe.

"The decision to privatize Telekomas parallels that of many other progressive, far-sighted nations and governments, and puts Lithuania well ahead of, for example, both Norway and Sweden where we hopefully will see real privatization in the near future," said Char-pentier.