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Mid Europa Partners announces sale of shares in Estonian Railways for $54 million

09 January 2007

Mid Europa Partners announced today that Baltic Rail Services ("BRS") completed the sale for €150 million to the Republic of Estonia of 66% of the share capital of Estonian Railways ("EVR"), an integrated freight railway and infrastructure owner which was acquired by BRS through the privatization of the railway in 2001 for €64 million.

BRS will also receive dividends of nearly €10 million from EVR. 

Mid Europa Partners owns 33.33% of BRS, along with international railway investment and management firms Rail World (USA) and Railroad Development Corporation (USA), and Ganiger Invest, a consortium of Estonian businessmen.

Following the completion of the sale and repayment of BRS debt, Mid Europa will receive $54 million. Mid Europa had also provided a mezzanine loan of €23 million which was refinanced by Nordea and repaid to in 2003. Through the proceeds of the EVR sale and earlier mezzanine loan Mid Europa  will achieve a return of more than 2.4 times on the investment with an IRR of 35%.

During the five years of BRS ownership Estonian Railways improved its safety record, traffic levels and overall efficiency and transparency of the company. The entire fleet of locomotives was replaced, and BRS heavily invested in upgrading of Estonian Railways' infrastructure.

Bill Morrow, Managing Director of Mid Europa, said: "We are pleased to announce another successful transaction for Mid Europa. This sale of EVR shares represents a positive outcome for all parties, enabling Mid Europa to achieve a significant return on its investment and the Estonian Government to proceed with its strategic plans for the railway sector." 

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