Primus, Fort, and Raidla Ellex Advise on Complicated AS Starman Transaction in the Baltics

Primus, Fort, and Raidla Ellex Advise on Complicated AS Starman Transaction in the Baltics

Deals and Cases
  • Smaller Small Medium Big Bigger
  • Default Helvetica Segoe Georgia Times

Primus has announced that it advised Estonian investment firm Polaris Invest on its EUR 83.6 million cash acquisition of a 63% stake in AS Starman, a major regional telecommunications firm with business in Estonia and Lithuania, from East Capital Explorer. The transaction, which valued the company at EUR 208 million, was financed by Elisa, which also agreed to purchase Starman’s Estonian operations from Polaris for EUR 151 million in cash. Elisa was represented by Fort, with both East Capital Explorer and Starman represented by Raidla Ellex.

Elisa's acquisition of Starman's Estonian operations is subject to the approval of Estonian competition authorities as well as other terms and conditions. Elisa estimates that the deal will be closed during the first quarter of 2017.

Polaris’s right to acquire Starman was affirmed by an arbitration tribunal at the Arbitration Institute of the Stockholm Chamber of Commerce (SCC) this October, following a complicated dispute with East Capital Explorer, the previous majority shareholder, over the validity of Polaris’s right of first refusal.

By triggering that right of first refusal — upheld by the SCC's arbitration tribunal — Polaris gained the majority stake in AS Starman, and negated the previous attempt to sell AS Starman to SM VII B.V. (reported on CEE Legal Matters on July 7, 2016), which failed to close. 

AS Starman is an Estonian cable television, VOIP telephony, and ISP company founded in 1992 and located in Tallinn. The company has been listed as SMN1T on the Tallinn Stock Exchange since June 17, 2006. In 2015 Starman bought the Lithuanian telecommunications company Cgates (as reported on January 2, 2015). That same year Starman’s Estonia business’ revenue was EUR 37 million and EBITDA EUR 18 million. At the end of Q3 2016 the company had approximately 122,000 cable TV subscriptions, 88,000 broadband subscriptions, 60,000 digital terrestrial subscriptions, and 30,000 telephony subscriptions. It is number one in pay TV services and number two in fixed broadband services in Estonia with market shares of approximately 35% and 20%, respectively.

East Capital Explorer AB is a Swedish investment company offering investment opportunities in Eastern Europe, with the Baltic countries representing the company’s largest investment region. The company primarily invests in unlisted assets within the private equity and real estate segments. 

Mia Jurke, CEO of East Capital Explorer, commented: “I am pleased to announce the completion of this transaction, which crystallizes a significant value creation over the past years. We are working intensely with our investment pipeline, while we continue with the share buyback program launched in May.”

Primus Estonia represented Polaris in the arbitration in Stockholm, and in related court proceedings in Estonia. Primus Estonia and Primus Lithuania also represented Polaris in all aspects of the purchase transaction and the associated financing and sale to Elisa. Arbitration was handled by Primus Estonia Partner Anton Sigal and Associate Liis Konn, while Partner Gerli Kilusk handled the transaction. The Lithuanian deal side was handled by Partners Giedre Dailidenaite and Ernesta Ziogiene and Associate Petras Pinevicius.

The Fort transaction team in Estonia was led by Partner Minni-Triin Park, with the financing team led by Partner Kirsti Pent and the competition team led by Partner Rene Frolov. The Lithuanian team was lead by Partners Andrius Mamontovas and Ruta Radzeviciute-Meizeraite.

The Raidla Ellex team advising East Capital Explorer was led by Partner Risto Vahimets and Toomas Vaher and Senior Associate Gerda Liik, with Partner Sven Papp advising AS Starman.