Edited on March 4 for some run on sentences :)
The Blackstone Group has sent a letter to the Latvian government indicating that its offer to buy the 49 % of Lattelecom owned by Sweden's TeliaSonera was based on Nils Melngailis remaining as the fixed network operator's CEO. This according to informed sources.
Since Melngailis has resigned, apparently under political pressure, the offer, logically, must be withdrawn. That means that the giant American private equity group is withdrawing from Latvia as an investment environment, not just the individual deal.
The initial management buy-out of 100 % of Lattelecom financed by Blackstone and a bank consortium was rejected for no particularly convincing reasons on January 17. Melngailis and Blackstone made another Plan B bid for TeliaSonera's share with the hope that the government would auction off its 51 % share in a reasonable time with the private equity company the only likely buyer (at this point, some kind of MBO plan would be executed). The purchase would also have involved covenants giving full operational and strategic control of Lattelecom to management (keeping the government at arm's length).
Now the whole thing has fallen apart, TeliaSonera has neither an exit nor a way to move forward with Lattelecom and mobile operator LMT (which it controls directly and indirectly just over 60 %).
The government has postponed for at least two weeks deciding on TeliaSonera's latest mildly sweetened offer to split Lattelecom into two companies -- a network wholesaler and services retailer --and to pay the same price of 500 million LVL (see the earlier post).
My opinion -- this is the start of another round of muddling around and procrastination. The government either doesn't know WTF it wants or it has some byzantine, bizarre "Latvian" plan for putting whatever will be left of Lattelecom in a few years into the "right hands". Time will show.