In accordance with the Shareholder’s decision of 24 November 2017, change in share capital of Latvenergo AS is registred on 20 March this year. As of 31 December 2017, the equity of Latvenergo Group was EUR 2.8 billion, including EUR 1.3 billion share capital of Latvenergo AS, which currently constitutesEUR 834 302 243.00.
The capital release is related to the solution supported by the Cabinet of Ministers on 29 August 2017 on the repurchase of 75 per cent of the future state commitments from Latvenergo AS regarding its cogeneration power plants Riga TEC-1 and Riga TEC-2 (CHPPs) in exchange to a one-off compensation payment in the amount of 454 million EUR that corresponds to the value of assets of Riga CHPPs. The compensation is financed by the funds generated through capital release of Latvenergo AS. As a result of this process, mandatory procurement public service obligation fee (MP PSO fee) has been reduced – as of 1 January 2018, the fee is 25.79 EUR/MWh, by 1 EUR/MWh compared to the former 26.79 EUR/MWh.
According to researches carried out by independent international third-parties, the capital structure ratios of Latvenergo Group are better than those of many benchmark companies and they will remain like that even after capital release. It is also confirmed by Moody’s that in March affirming the credit rating of Latvenergo AS, Baa2, stable, has taken in consideration the restructuring in Riga CHPPs’capacity payments and the respective capital release.