Monday, May 22, 2006

Moving right along...on the LMT deal

TeliaSonera and the Latvian government are understood to be close to agreement on how to make an appraisal of Latvian Mobile Telephone (LMT) and Lattelecom so that both sides can move along on getting the appraisal done and coming to an agreement on how to swap TeliaSonera's (49 %) Lattelecom stake plus some cash for the rest of LMT. It now looks like the appraisal will be made by two companies, which are tentatively acceptable to both parties. Since appraising a non-listed company is difficult, the parties are ready to accept a consensus of two as the benchmark for further talks.

Bizarro rumors..
..are being spread by the sometimes crackpot-leaning Neatkariga Rita Avize (NRA), which writes that TeliaSonera wants to unseat Lattelecom CEO Nils Melngailis because they are unhappy with his management and with the profitability of fixed network operator. While Melngailis undoubtedly places somewhat different accents on priorities (his mission, after all, is to increase the value of Lattelecom, which sorta also increases the value of the stakeholding), the Swedes would be utter fools to tamper with him at this time. Until a final deal is made, Lattelecom is one of the means of payment for LMT. Creating turbulence around the management of Lattelecom is like having a pocket full of EUR to pay for something, and then dissing the euro, so that your potential payment looses value. Indeed, if the Swedes were totally Machiavellian (which they were not) and if instead of Melngailis, Lattelecom was run by a baboon on nitrous oxide, the smartest thing for TeliaSonera would be to say the baboon was a fantastic CEO who just happens to get a little carried away with twirling his own tail and laughing hysterically about it.
Why so? Because it is to TeliaSonera's advantage now to make Lattelecom appear like the greatest thing since soft cheese spread. Indeed, the better the company looks, the less the Swedes will have to reach into their cash till to pay on top of their swap. Once the deal is done, Lattelecom is not the Swedes' problem any more. Simple as that.

And now I'm paranoid...
..,because the word is out that some PR-related people are looking into Melngailis' background, his business interests outside of Lattelecom, what banks he deals with, even whether one of his children attends school in Britain. Now that makes me wonder whether the article in the Zoonie-tunes, sorry, NRA has its roots in the so-called black PR business in Latvia. It seems that someone is seeking innocent ingredients for a witches' brew.
For the record, Nils Melngailis is, as we say back in the hood, my homeboy, from the Boston area Latvian community, and he was briefly my pupil in the Boston Latvian Saturday School in like 1970-whatever, when i was a 20-something hippie (I think I taught some Latvian lessons still stoned from Friday night smoking grass on my parent's house front porch in Newton, MA, I remember I had the kids pound the table to imitate the hooves of German Knights of the Cross crusader horses riding into ancient Latvia, why, exactly, I don't remember). However, between then and now both Nils and I left the hood and I really don't know much of what he did, except it included some upper echelon business intelligence stuff at IBM in Great Britain and a stint at Coopers & Lybrand in Latvia.

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