Latvia's new Government suggests scrapping Lattelecom buyout

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Latvia's government has considered not approving the Blackstone-led $575m buyout of Lattelecom, a local telecom business, and opening up the privatisation process of the telecom giant for other bidders. New prime minister Ivars Godmanis, who represents Latvia's liberal party Latvian Way, has discussed alternative routes for the privatisation with his cabinet, including keeping a majority stake or selling to a higher bidder, according to press reports.

According to the same reports, after the first meeting between the Blackstone consortium and the new Government, it was said that Blackstone could still buy TeliaSonera's 49% stake in LatteleCom but that the Government would auction its 51% stake to the highest bidder. Once it bought TeliaSonera's stake, Blackstone would gain the right to match the highest bid from the auction.

In July last year, the previous government agreed to buy back 49% of Lattelecom from TeleSonera and sell the entire group to the management. Blackstone led a consortium of investors that announced the $575m MBO of the group (September 2007, page 29). In September, the previous government also approved the financing package of EUR395m that was assembled by a constellation of banks including: Unicredit, Nordea, Parex Bank and DnB Nor.