TGS Baltic advised East Capital Explorer AB

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TGS Baltic advised East Capital Explorer AB on Lithuanian law matters related to the sale of Starman Group to its minority shareholder Polaris.

This transaction has been one of the most complex M&A transactions in the Baltics in recent years, and had been subject to several arbitrations proceeding before it could be completed. Initially, in March 2016, East Capital Explorer had agreed to sell its entire interest in Starman Group to Providence Equity for an equity value of approximately EUR 81 million, with the potential for an additional earn-out of up to EUR 5 million. The transaction would represent an implied total enterprise value of approximately EUR 210 million.

The transaction was originally expected to be completed in the second quarter 2016. However, the minority shareholder of Starman Group, Estonian holding company Polaris, has expressed its intentions to affect the right of first refusal and pre-emption right and to acquire the shares of Starman Group. A dispute arose between the parties as to the mechanics of the implementation of the rights afforded to Polaris.

The arbitration panel of Arbitration Institute of Stockholm Chamber of Commerce ruled that Polaris, a minority shareholder in Starman, has not waived its pre-emption right, thereby enabling Polaris to acquire East Capital Explorer’s 63% interest in Starman Group at the same terms as stipulated in the agreement with Providence. The transaction was closed on 13 December 2016 for a cash consideration of EUR 83.6 million.

Since the biggest operating company of Starman Group is UAB Cgates, the second largest pay-tv and internet services provider in Lithuania, TGS Baltic has been involved in the transaction since its inception. We have been instrumental in obtaining the merger and regulatory clearances for the transaction and have been involved in advising the client in arbitration proceedings on Lithuanian law matters.