Lietuvos Telekomas IPO

complete

The Government of Lithuania has decided to accelerate its privatisation programme and sell significant infrastructure assets that it still owns. One of the prime assets is the Government's 35% share of AB Lietuvos Telekomas (LT), the incumbent fixed-line operator. Due to complex market conditions the VTF chose to offer 25% of Company shares with a 3% over allotment option to the public while retaining about 7% of the company to be sold at a later stage. LT’s ordinary shares are now listed on the National Stock Exchange of Lithuania. GDRs are listed on the LSE and traded on SEAQ International. Shares were also offered in the US to "qualified institutional buyers" under "Rule 144a". The institutional offering was accompanied by a domestic retail offering, with full flexibility in terms of final allocation between tranches. The initial public offering (IPO) was the first significant entry to the global capital markets by a Lithuanian company and is the largest IPO in Lithuania to date. The main project objective is to ensure a successful IPO of the company (thereby achieving full privatisation of LT) and provide it with access to both local and international financial markets. The IPO of LT: (i) advanced an essential element of the Government's privatisation programme; (ii) is expected further enforce private market disciplines, thereby enhancing operating performance; (iii) has added significant liquidity and depth to Lithuanian equity markets, improved Lithuania's exposure to international capital markets and attracted new sources of finance from capital markets, increasing investment in telecommunications. Furthermore, as the first significant IPO in the country with listings in Vilnius and London, the transaction is expected to have an important demonstration effect, providing additional confidence for investors in the equity markets in the region. LT was registered as a joint-stock company on 16 June 1997. It is the successor to the State Enterprise established by the Ministry of Communications and Informatics on 1 January 1992, when a number of regional telecommunications networks and local companies were merged into one company. The company was privatised in June 1998 following an international tender. The consortium formed by Telia and Sonera, Amber Teleholding A/S (or "Amber") won the tender and purchased 60% of LT for US$ 510 million. The VTF sold a further 5% to LT employees, subject to a lock-up agreement until August 2000. The EBRD committed US$ 50 million to subscribe to GDRs at IPO. Some 6.3 million GDRs were allocated to the EBRD for a total of US$ 49.6 million at the IPO price of US$ 7.875 per GDR (equivalent to LTL 3.15 per share). This has resulted in the EBRD holding 7.73% of the company. The total IPO valuation of the company was US$ 641.7 million. IPO proceeds are expected to be around US$ 300 million. The project was screened as C/0, indicating that no environmental issues were associated with this operation. A corporate environmental review of the company had already been carried out in the existing operation, a US$ 25 million sovereign-guaranteed debt facility extended by the EBRD in June 1994. None.