Lithuania's City Service LT will not be sold by set deadline

The company is part of City Service, the Baltics' leading property maintenance and administration services group.

Eversus.lt quoted its sources as saying that City Service LT would not be sold by 1 July. Adding weight to these expectations is the fact that the Competition Council has until now received no request for regulatory approval of such a sale. It is being speculated in the market that the main hindrance to reaching a deal is that "nobody agrees to pay the price they want."

It is said that City Service LT could be sold "in a month or two," with the investment company East Capital seen as one of several potential investors.

"We have nothing to say at the moment. There are still several days to go. In any case, City Service would not be able to perform heating substation maintenance operations. So there should be some news anyway," Nerijus Mikalajūnas, spokesman for City Service, told the website.

He added that it would be clear by the end of the week what City Service's building maintenance services business would look like.

"The transitional period provided by the Law on Heating Sector ends on 1 July 2012. Therefore, City Service will be unable to provide maintenance services for buildings' heating and hot water systems, simply because it will not be certified by the State Energy Inspectorate under the Energy Ministry," said Daivis Svirinas, managing partner at the law firm Borenius.

Otherwise, the Energy Inspectorate may suspend or cancel the company's certificate and impose a fine of up to 10 percent of annual revenue, he said.

1 July is the deadline by which City Service's shareholders have to sell City Service LT, because certain amendments to the Law on Heating Sector do not allow a company that is related to metering devices' manufacturing and biofuel supply operations to administer multi-apartment buildings.

City Service LT's owner, the Icor Group, also owns Axis Industries, which produces water and heat metering devices and automatic district heating substation modules. Another company of the group, Bionovus, produces biofuel, which is used for heat production.

Financial analysts say that City Service LT could be sold for 120 million to 140 million litas (EUR 35-41 m).

City Service has been trying to sell part of its business, related to building maintenance services, since the spring of 2011. According to Eversus.lt, the investment banking company Porta Finance has replaced Swedbank as the financial advisor on the sale.