Decisions of the Shareholder's Meeting of Latvenergo AS
April 24, 2020
Today, on 24 April, the Shareholder's Meeting of Latvenergo AS took place, during which it was decided to reduce the share capital of Latvenergo AS by EUR 222,678,000. After the reduction, the share capital of Latvenergo AS will constitute EUR 612,205,449. According to the audited results of 2019, the equity of Latvenergo AS as of 31 December 2019 was EUR 1,949.3 million.
According to Section 264 of the Commercial Law, in case of reduction of the share capital, Latvenergo AS shall provide security for those creditors who have submitted written applications within one month after publishing a notice on reduction of the share capital in the Official Gazette Latvijas Vēstnesis.
As already announced, the reduction of the share capital is related to the decision adopted by the Cabinet of Ministers of the Republic of Latvia on 8 October 2019 to support complete unbundling of the electricity transmission system operator, setting 1 July 2020 as the term for enforcement of the decision. Unbundling of transmission assets takes place by reducing the share capital of Latvenergo AS, by withdrawing capital shares in Latvijas elektriskie tīkli AS of the asset base of Latvenergo AS. After capital shares in Latvijas elektriskie tīkli AS become a property of the state, they will be invested in the share capital of Augstsprieguma tīkls AS.
According to the aforesaid decision of the Cabinet of Ministers on unbundling of transmission assets, this year it is also planned to increase the share capital of Latvenergo AS, investing in it the retained earnings of previous years in the amount up to the value of capital shares of Latvijas elektriskie tīkli AS, removed from the asset base of Latvenergo AS.
In accordance with the assessment of independent third parties, the capital structure indicators of Latvenergo Group are better than those of most of industry companies and those will be preserved also after the share capital is reduced. Last year, on 15 October, the international credit rating agency Moody’s affirmed the credit rating of Latvenergo AS on the investment grade Baa2 level with stable outlook. Moody’s took into consideration the planned unbundling of electricity transmission assets from Latvenergo AS, when determining the credit rating of Latvenergo AS. Moody’s emphasised the positive competitive position of Latvenergo Group on the Baltic electricity market, efficient and environmentally friendly hydropower plants, the share of distribution revenues, as well as the strong financial situation as positive factors.