The Latvian government has rejected the LVL 290 million management and staff buyout proposed by Lattelecom CEO Nils Melngailis and financed by The Blackstone Group and a consortium of banks.
Prime Minister Ivars Godmanis proposed, instead, that TeliaSonera sell its 49 % holding in Lattelecom to Blackstone or someone else, getting a chance to buy mobile operator LMT in return. At some undefined time in the future, the government will then auction its 51 % share of Lattelecom to a select shortlist of serious European Economic Space (European Union plus Switzerland and Norway) companies but NOT TeliaSonera.
First impression-- I was right that this deal would be effectively killed by the government.
The government's scheme is, to say the least, bizarre. It rejects the only "serious EU telco"that has been trying to buy Lattelecom for the past five years on specious anti-monopoly grounds. There is no one I can imagine who would bid for Lattelecom, a fixed-network only company 49 % owned by god-knows-who (if Blackstone, as one would expect, politely declines to buy in and have to deal with these lunatics).
Look for Blackstone and Nils Melngailis to bow out soon. TeliaSonera may make one last bid, but probably write off its holdings in Lattelecom as a stranded investment.
The company will flounder for a while, no one will come to the auction, and the state will have effectively screwed up a potentially powerful Latvian company.
I am somewhat saddened to have been right...