TALLINN-RIGA - Merko Ehitus, the Estonia-based Pan-Baltic construction conglomerate, signed onto the much-maligned ice hockey stadium project in Riga last week, giving the project fresh impetus as the deadline for the start of construction approaches.
The 25 million euro stadium agreement will now involve four parties: the Latvian state, the Latvian Ice Hockey Federation, Multihalle, the local company that won the tender for the stadium, and Merks, the Latvian subsidiary of Merko Ehitus.
Merks CEO Ivars Geidans said the agreement provided that ice-hall construction will be completed by Sept. 1, 2005, the official deadline.
"The agreement will allow to move forward from a kind of stagnation," said Geidans.
Multihalle and Merks said they planned to finalize the details of their agreement by March 31.
Geidans said Merks was ready to invest all required investments into arena construction in return for the right to help build commercial buildings that are due to be erected on the 15 hectares of land surrounding the arena.
He also said that Merks could borrow money from banks, though the loans would not exceed 25 percent - 30 percent of the total arena construction costs. He stressed that Merko Ehitus has 31 million lats (46 million euros) in share capital and no debts - thus banks would be more than willing to issue loans.
The Cabinet of Ministers supported the four-sided agreement on Feb. 24, with the caveat that Merks provided 2 million lats (3 million euros) to the Finance Ministry within 10 days after signing the agreement, guaranteeing that the company would finish the arena by September 2005.
Geidans said he was surprised by the Cabinet's decision and that Merks would not provide any guarantee to the state. It would, however, provide one for its partner, Multihalle.
It was not clear how the situation would be resolved when The Baltic Times went to press.
International Ice Hockey Federation officials were due to visit Latvia in March to study how preparations for the 2006 championship were proceeding. It is not ruled out that Latvia could lose the right to host the prestigious event, as such a precedent has been established in the past.
Multihalle director Ivars Kalviskis said that construction of the ice hockey arena, which will host the World Ice Hockey Championship in 2006, could start this month.
"Coordination of blueprints is under way and could be completed early in March and then construction could start," he said.
Acting Economy Minister Ivars Gaters expressed doubt about such optimism, noting the national construction inspectorate would not issue any construction permit based just on blueprints.
The head of the Riga City Council's development committee, Andris Ameriks, told reporters that the city was pleased that an investor had been found for the arena, and he praised the choice of Merks in particular.
Meanwhile, Merko Ehitus reported record consolidated sales of 173.1 million euros and a net profit of 11.8 million euros for 2003, a year-on-year increase of 62 percent and 86 percent, respectively.
Most of the sales, or about 108 million euros, came from the Estonian market, while Merks managed 17 million euros in sales and the Lithuanian branch, Merko Statyba, 27 million euros, the company announced last week.
The company is currently working on three major projects in Estonia - the new complex of the Estonian Art Museum, expansion of the Viru shopping center and reconstruction of Viru Square in Tallinn.
Merko Ehitus' major shareholders are Merko Grupp (72 percent) and Nordea Bank (14 percent).
Last week the London Stock Exchange added Merko Ehitus, together with Hansabank and Estonian Telecom, to the recently created New EU Index.