Riga Stock Exchange proposes a solution for Lattelecom privatization

07.01.2008 RIG

The RSE recommends an open auction at the stock exchange as a tool allowing maintaining these principles. To start with, it is paramount that both privatization as well as auction rules incorporate all the important requirements, restrictions and obligations, subsequently to become binding to the controlling investor (e.g. the minimum size of holding earmarked for employees; the limitations for Telia Sonera to acquire, directly or indirectly, Lattelecom shares etc.). Consequently, the goals that are essential both for the state and Lattelecom will become attainable:
• to maximize proceeds to the state;
• to promote competition in the telecommunications market;
• to create a motivation to Lattelecom management and employees by allocating shares in the company;
• to set up an investor structure that would suit the development of Lattelecom best, and to assure capital availability for growth projects.

RSE believes that an open auction at the stock exchange will allow attaining the goals in a relatively less complicated manner that is better understandable to all stakeholders.

Management buy-out, so far the sole model that has been discussed publicly, does not support one of the most crucial selling principles – a competitive price auction that would maximize the number of participants and a give certainty that the state has disposed of the shares at the highest price possible. The auction organization process is no more time-consuming than any other selling model and would require 5-6 months as of the moment when the state has issued the instruction to organize the selling.

The proposed solution to sell the shares at an open auction is possible provided it is acceptable both to the Republic of Latvia and TeliaSonera. RSE is ready to participate in discussions with TeliaSonera in order to explain our proposal in greater detail and to seek for solutions that would be mutually advantageous to TeliaSonera and Latvia. RSE is also ready to offer its expertise and support in privatizing Lattelecom via an open auction in the best interests of Latvia and according to international standards, as well as to complete the privatization in a reasonably short timeframe and in a transparent manner.

RSE has built a substantial experience in organizing company privatization and Government Treasury bill auctions. JSC Latvijas Gāze, JSC Latvijas kuģniecība, JSC Latvijas Unibanka are just a few to mention. Ventspils nafta share auction in late 2006, the most recent example, was a success: the state disposed of its entire holding in the company and raised 74.2 million lats. RSE has good working relationship with Privatization Agency, international and domestic banks and law firms; it also enjoys the support of OMX Group, its parent company.


For more information, please contact:
Āris Dreimanis, Head of Corporate Communications
Riga Stock Exchange +371 7212431