Latvian Forest Company has previously announced that it has entered the letter of intent with Sweden based, well established company regarding the sale of its subsidiaries in Latvia. The parties’ intention is to sign a share purchase agreement in early May. Latvian Forest Company aims to convene an Extraordinary General Meeting to decide on the sale in the first week of May 2023.
On February 15, 2023, Latvian Forest Company AB entered a letter of intent to sell its two Latvian subsidiaries to a Sweden based well established company active in the forest industry. The transaction comprises 5,880 hectares of land with growing stock of 770,000 m3 with an estimated asset value of EUR 37,100,000.
The sale of the two subsidiaries, and accordingly indirectly a significant part of the company’s operations, is expected to take place after completion of due diligence, which is expected to be completed by the end of June 2023. The buyer is a Sweden based, well established company active in the forest industry.
The final purchase price is intended to amount to the estimated value of the companies’ forest- and agricultural properties (MEUR 37.1) plus/minus the working capital of the subsidiaries on the closing date, subject to any adjustments agreed between the parties in the share purchase agreement. Based on the operating balance sheets that existed at the end of 2022, an estimated net purchase price amounts to approximately MEUR 28.6 after adjustment for net working capital (MEUR 0.5), deduction of costs for M&A insurance and other transaction costs (approximately MEUR 0.4), repayment of outstanding shareholder loans under special agreement (MEUR 6.6) and repayment of bank loans (MEUR 1.6).
The transaction is not intended to include the company’s Lithuanian subsidiary Lithuanian Forest Company UAB with 1,709 hectares of land and approximately 353,000 m3 of growing stock. The intention is also to omit 162 hectares of land with approximately 17,000 m3 of growing stock in Latvia. This portfolio consists of a contiguous property with a recreational area covering 105 hectares in southeastern Latvia, a 24-hectare beachfront property with planning permission on the Gulf of Riga and properties acquired by the company after December 31, 2022.
The letter of intent is not binding on the parties but constitutes an explicit intention to negotiate and sign a final transfer agreement. Since the sale of the shares in the two Latvian subsidiaries entails the divestment of a significant part of the company’s assets, the transaction will be submitted to the shareholders at an Extraordinary General Meeting. The company’s Board of Directors will convene an Extraordinary General Meeting as soon as a binding share purchase agreement has been entered into, whereby the completion of the transaction will be conditional on the resolution of the General Meeting. According to the updated preliminary timetable, share purchase agreements are expected to be concluded in early May.
För ytterligare information kontakta
Aleksandrs Tralmaks, VD
+37129203972
Eller besök vår hemsida: www.latvianforest.se