“Latvijas gāze” (LG) has signed a final agreement on the sale of its wholly-owned subsidiary – natural gas distribution system operator AS “Gaso” to the Estonian company “Eesti Gaas”, according to LG’s statement to the stock exchange “Nasdaq Riga”.
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Completion of the transaction still requires the government’s approval for the takeover of national security assets and the permission of the competition authority.
LG will receive a base consideration of 120 million euros in equity and interest until the transaction is completed. The transaction is expected to close by the end of 2023, subject to the fulfillment of closing conditions.
The mentioned transaction is one of the steps of LG’s strategic plan – to rationalize its operations and focus on its core business, which is gas wholesale and retail.
The Chairman of the Board of LG, Aigars Kalvītis, states in a statement to the stock exchange that the sale allows to concentrate resources on the core business and create value for the company’s shareholders.
On the other hand, the chairman of the board of “Eesti Gaas”, Ains Hanšmits, states that the company sees the future in natural gas and knows how to build and develop this business.
“Gas is and remains an important source of energy in Latvia, and this encourages us to invest,” emphasizes Hanšmits.
It has already been announced that this year LG started the process of selling Gaso, because according to the current regulation, Gaso cannot be managed by Russian or Belarusian shareholders, but LG is a shareholder representing the Russian state.
The sales process consisted of several stages of work to be done. In a statement to the “Nasdaq Riga” stock exchange at the end of March, it was said that interested investors had been approached, a data and information package had been prepared and sent to potential investors, and the due diligence evaluation process of potential investors had been completed. Binding offers from potential investors have been received and, after the completion of this stage, offer analysis and proposal development have been carried out.
Earlier, Latvian Television’s program “De facto” announced that the Latvian state-owned electric energy concern AS “Latvenergo” has also shown interest in the purchase of “Gaso”.
Gaso’s revenue last year, according to preliminary data, was 52.46 million euros, which is 11.3% less than in 2021, and the company also suffered a loss of 1.751 million euros, against a profit a year earlier.
“Gasso” is the only natural gas distribution system operator in Latvia. The company provides security of natural gas networks, technical services and accounting of natural gas consumption. “Gaso” was established at the end of 2017, separating the operation of the distribution system of “Latvijas gas” and fulfilling the requirements of the European Union and the state for ensuring the independence of the natural gas distribution system. The company’s share capital is EUR 39.9 million, according to “Firmas.lv” information. The sole shareholder of Gaso is LG.
On the other hand, LG’s largest shareholders are Russia’s Gazprom (34%), Marguerite Gas II.Sarl fund (28.97%), German company Uniper Ruhrgas International GmbH (18.26%) and SIA Itera Latvija (16 %).
On the other hand, the sole shareholder of “Eesti Gaas” is “Trilini Energy”, a subsidiary of the Estonian investment company “Infortar”.
Using the “Elenger” brand, “Eesti Gaas” operates in several foreign markets – in Latvia, Lithuania, Finland and Poland. In total, the company has 50,000 customers.
In Estonia, “Eesti Gaas” delivers natural gas to its customers through pipelines, as well as compressed and liquefied natural gas, and manages the largest gas distribution network in the country.
The owner of “Eesti Gaas”, the Estonian investment company “Infortar”, operates in five countries, and the company’s main fields of activity are energy, freight transport and real estate. The balance sheet of “Infortar” reaches 1.1 billion euros. The “Infortar” concern includes a total of 47 companies. “Infortar” owns 41% of AS “Tallink Grupp”, 100% of “Eesti Gaas”, as well as a diverse real estate portfolio.
“Infortar” is owned by Estonian businessmen Ain Hanšmit, Enna Pant and Kalev Jervelilla.