Latvijas Gāze management plots buyout with backing from Rietumu bank

The management of Latvian energy company AS Latvijas Gāze – which includes a former Prime Minister – plans to buy the company out, according to a statement of intent published on the Nasdaq Baltic stock exchange.

The statement said the AS Latvijas Gāze management buy-out (MBO) team, led by chaiman and former PM Aigars Kalvītis was "mobilising financing for the next step" via a special purpose vehicle called Energy Investments SIA. Its founders and board members are Aigars Kalvītis, Elita Dreimane and Egīls Lapsalis who also serve in the board of AS Latvijas Gāze.

"As part of the process, an agreement has been reached with the current financier AS Rietumu Banka on the next steps," the statement signed by Kalvītis said.

"In order to raise funds for further stages of share acquisition, Energy Investments SIA has, as part of financing the MBO project, sold the issuer’s shares (~29%) purchased in the first stage of management buy-out to Rietumu Banka as financier, with a right to repurchase. The financial instrument sale contract envisages buy-back conditions for a 3-year period. Such financing model is widespread across the major finance and energy markets of the European Union. During the said period, Rietumu Banka will be an investor and a full-fledged shareholder of AS Latvijas Gāze," the statement said.

Kalvītis said: “The agreement reached with AS “Rietumu Banka” will enable the MBO team to buy out AS Latvijas Gāze”shares from the current major shareholders in a relatively short time frame and make the company an energy market flagship controlled by domestic capital. Furthermore, we are confident of buying back the shares from the financier in less than 3 years.”

The current shareholders in Latvijas Gāze are Russia's Gazprom (34%), Energy Investments (28.97%), Germany's Uniper Rughrgas International (18.26%), and Itera Latvia (16%) with other shareholders owning 2,77% of the company.

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