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Estonian Railways Soap Opera Continues

Wanna buy a railroad?

Even though Baltic Rail Services (BRS) has finally thrown in the towel and said it wants to sell its majority stake (66%) in Estonian Railways, this hasnÂ’t stopped the soap opera.

On Tuesday, Estonian Economy and Communications Minister Edgar Savisaar said no private investor would be interested in the price BRS is demanding. “I think that BRS will have even more complicated negotiations with private investors and other interested parties than with the state, since I don’t know anyone among them who would be ready to pay such an oversized price that BRS demands at present,” Savisaar said. The minister has also said that he has met with many potential bidders and that they are concerned about the state’s position. Fair enough, but Mr. Savisaar’s unique position is quite interesting. He is meeting with buyers, speaking on behalf of the state, yet he is also a bidder for the BRS shares. This seems a rather interesting conflict of interest.

BRS has said five international investors beside the Estonian state have shown interest in purchasing the stake. Initially, BRS asked nearly 3 billion kroons for the 66% stake. Economy Ministry advisor Heido Vitsur has said the gap between the price the state would agree to pay and what BRS demands has decreased considerably. The ministry is not ready to pay more than 2.2 billion kroons while BRSÂ’s price tag starts from 2.6 billion.

BRS announced last week that it has severed the letter of intentions agreement with the state for selling the stake, since the state exceeded the deadline for making decisions. According to the letter of intent, the state was supposed to decide before February 3rd whether it wished to buy BRSÂ’s stake, though this does not rule out the possibility that the state could still purchase the railway.

BRS last week that five different international investors have confirmed interest in buying their 66% stake. Who are the possible five? RussiaÂ’s Spacecom says it isnÂ’t one. Estonian newspapers reported last week that Russian capital-based Estonian railway operator Spacecom manager Oleg Ossinovski confirmed that none of the Russian Severstaltrans concern companies are interested. Ossinovski said it is unlikely any company would want to be strategic investor in Estonian Railways since the new investor would immediately meet the same problems.

Jüri Käo, representative of Ganiger Invest, which owns a third of BRS, has hinted earlier that there is a long row of potential buyers of the stake in Eesti Raudtee. Käo has said that the state is one of the least likely buyers.

City Paper wishes the new buyer luck, whoever he may be. As the Estonian expression goes, jõudu tööle or roughly “strength for your work.” The new buyer is going to need all the strength he can get.