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Edelaraudtee sold to GB

01 Jan 2001

ON NOVEMBER 27 Estonia's privatisation agency announced that it had signed an agreement with Britain's GB Railways for the sale of the independent state-owned south-west railway, Edelaraudtee.

GB is paying 10m kroons (US$550000) for the business, and has agreed to invest 260m kroons over the next five years. Of this, 100m kroons will be raised through increasing the share capital.

The government will provide subsidies totalling 845m kroons over nine years to support Edelaraudtee operations. During 2000 the company invested 39m kroons on rolling stock and 46m on infrastructure.

Meanwhile, the Rail Estonia group was selected last month as preferred bidder to take a 66% stake in Estonian Railways; final negotiations are due to be completed by the end of February. Originally fronted by CSX, the consortium is now led by US consultancy Kingsley Group and RailAmerica (RG 11.00 p695), but has approached Canadian Pacific Railway to become a strategic partner.

Rail Estonia is reported to have bid 1·7bn kroons for EVR, compared to 1bn from Baltic Rail Services, which includes Rail World Inc and Jarvis; the RER grouping backed by SJ International and Serco has offered 900m. The privatisation agency was expecting to raise between 1bn and 1·5bn kroons. n