Estonia’s Cabinet approved the proposal of the Minister of Infrastructure Vladimir Svet to continue with the Operail privatisation process and finalise the sale transaction.
“Cargo transport is not a strategically important activity for the state, so we have decided to privatise the company. I am pleased that there is interest in Operail and that we can move forward with the sales process. A private investor can expand their business operations, allowing the company to continue its activities, while the state can direct its resources to strategically necessary activities,” the Minister of Infrastructure Vladimir Svet, said.
Operail privatisation process will take place in two stages. The first stage is a public auction to sell the company’s assets and business lines, which began this June. Potential buyers had the opportunity to review the initial information package and submit a non-binding offer. “There was a lot of interest, and the profile of the interested parties was wide, including those from Estonia and abroad,” the minister explained.
In the second stage, suitable investors will have access to additional information, based on which they can submit a binding purchase offer. The decision by the Cabinet creates the prerequisite for conducting detailed negotiations with companies upon receiving binding offers and finalising the company’s sale transaction.
LHV Investment Banking Unit is conducting the auction.
Operail employes 2000 people.
Operail’s business activities on the Estonian freight market are currently unprofitable but its privatisation will unlock its potential to deliver significant benefits to the Estonian rail sector.
In 2023, the freight volume on the Estonian rail network decreased by 39% and Operail’s freight activity faced a decrease of 70%. The main driver for these negative results was the impact of the war in Ukraine and as a result, Operail experienced an 83% reduction in cargo volume in the first six months of 2023.
Share on:
