LATVIA - Blackstone leads $575m management buyout of Lattelecom

Linn
14 September 2007

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The Blackstone Group has invested $178m (Lt 90m), as part of a $575m management buyout and privatisation of Latvian telecom company Lattelecom. The sellers are the Latvian government (51%) and TeliaSonera (49%), the Swedish telecom operator. At the completion of the transaction, Blackstone will own a 51% stake in the company.

It is understood that the transaction process was highly competitive. More than 10 private equity funds and 20 banks offered to finance the deal. The current turbulence in the debt markets made it more difficult than expected to obtain leverage for deal. Additionally, the investors were concerned about possible overheating in the Latvian economy.

The Cabinet of Ministers received confirmation from Blackstone that it had full financing for the Lattelecom transaction on 12 September. Unicredit, Nordea, Parex Bank and DnB Nor underwrote approximately $395m (Lt 200m) in EUR and lat denominated debt. Management will also invest about $19.8m (Lt 10m) to cover the expenses and to finance its 49% stake in the company.

Rumours regarding the sale of Lattelecom have been circulating in the Baltic private equity market for some time with Nordic unquote” reporting on the issue in May.