Estonia, Financial Services, Legislation, Port, Transport

Within the framework of the compromise, Tallinna Sadam will pay into the bankruptcy estate 2.7 million euros, received by Tallinna Sadam from the organization and sale of the Coal Terminal assets transferred to its possession, Tallinna Sadam told the stock exchange.

The compromise has not yet entered into force and its approval shall be decided by the court within 15 days from the date of submission of the compromise decision to the court, making a ruling thereon, which shall enter into force after the expiry of the opposition period.

The bankruptcy of Coal Terminal, a long-term customer of Tallinna Sadam, was declared on May 2, 2017. As bankruptcy trustees refused to execute commitments under the right of superficies contracts, the contracts together with the assets erected on the plots covered by the right of superficies contracts were transferred back into the possession of Tallinna Sadam.

Under the contracts, Tallinna Sadam has to compensate the value of buildings and equipment that form an essential part of the rights of superficies, the amount of which cannot be estimated reliably because the assets are special-purpose assets for which a regular market does not exist and there are contradictory views both among the experts and the parties of the dispute on the valuation methods that should be used.

On June 21, 2019, Harju County Court started the proceedings on the claim filed by Coal Terminal and its bankruptcy trustees on May 20, 2019 against Tallinna Sadam applying for compensation of the market value of the former coal terminal buildings and equipment in Muuga Harbor plus accrued interest in connection with the expiration of the right of superficies contracts.

The claim amounts to 22.4 million euros plus accrued interest. In connection with the termination of contracts, Tallinna Sadam has submitted a counter-claim to Coal Terminal in amount of 11.7 million euros for compensation of the damages resulting from the termination of contracts. The compromise would end the above mentioned and all other litigation between the parties.

The management board of Tallinna Sadam has not recognized a provision for a possible claim, except for the amount received from the sale of Coal Terminal's assets, as the final monetary impact to Tallinna Sadam from the bankruptcy proceedings of Coal Terminal depended on the combined effect of the outcomes of several parallel disputes, which could not be estimated reliably and there was no certainty about the timing of the realization of the claims and liabilities.

As the amount of the compromise corresponds to the amount received from the organization and the sale of Coal Terminal's assets, the conclusion of the compromise will not have a significant impact on the group's financial results.