Private equity group Blackstone will invest LVL90 million (USD178 million) to take a 51% stake in Lattelecom, the Latvian telecoms group being privatised via a LVL290 million management buy-out. Lattelecom’s management announced yesterday that they had chosen Blackstone and a syndicate of four banks to finance the buy-out from the Latvian government and TeliaSonera. Nils Melngailis, Lattelecom’s chief executive, said more than ten private equity funds and 20 banks had offered to finance the transaction, but that fixing terms had been more difficult than he had foreseen, given the global market turbulence and increased concerns over the overheating Latvian economy. ‘We couldn’t have picked a worse time to look for financing,’ he admitted.
Lattelecom eventually chose Unicredit, Nordea Bank, Parex Bank and DnB Nor to raise LVL200 million in euro and lat denominated debt. The management will also invest LLV10 million to cover transaction expenses and will hold 49% of the company after the buy-out, which should be completed in November.
As part of the transaction TeliaSonera has agreed to take full ownership of cellco LMT. The Swedish company already directly owns 49% of LMT and has management control. In a deal that values LMT at LVL668 million, TeliaSonera will give the state about LVL130 million plus its stake in Lattelecom, and will receive Lattelecom’s 23% stake in LMT and the 28% shareholding owned by the government.