Information on buyout of shares of ESO and Ignitis gamyba

On 18 May 2020, Ignitis grupė, an international energy company, started the mandatory buyout of shares of its subsidiaries AB Energijos skirstymo operatorius (ESO) and AB Ignitis gamyba. The mandatory buyout of shares of Ignitis gamyba was finished on 17 August 2020. Following mandatory buyout, Ignitis grupė, after having made payments to the deposit account of shareholders who did not sell shares, will apply before the court regarding the transfer of ownership of shares to it. Therefore, no active efforts of shareholders are needed so far. At present, the process of mandatory buyout of shares of ESO is suspended due to the claim brought before the court. Although the shareholders selling their shares will not suffer financial losses, the process can be lengthy. The information on the reopening of the buyout will be provided in a separate notice.

At the time of the mandatory buyout of shares of ESO, the Company offers the price agreed with the Bank of Lithuania for the shares, which is the same as those paid during the non-competitive tender offers. At the time of the mandatory buyout, the price of EUR 0.880 per share will be paid for shares of ESO. During the mandatory buyout, the Company offered the price of EUR 0.640 per share for shares of Ignitis gamyba.

Ignitis grupė will announce all relevant information about the ongoing court proceedings and their development on the website.

Information regarding the mandatory buyout of ESO and Ignitis gamyba shares

Most important related news:

Delisting decision of 11 November 2019
Recommendation of 28 February 2020 to prepare for the IPO of “Ignitis Grupė“
Information of 17 March 2020 about the Settlement Agreement that has been entered into with the representatives of the minority shareholders
On 23 March 2020, the preparation for the IPO of “Ignitis Grupė“ has begun
On 31 March 2020, the Bank of Lithuania approved the circulars of official tender offers
On 2 April, the start of the official tender offer for shares of ESO and Ignitis gamyba
On 23 April, information regarding the end of official tender offers

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Answers to FAQs following the mandatory buyout

I did not sell any shares during the mandatory buyout. Can I still do that?

Following mandatory buyout, Ignitis grupė, after having made payments to the deposit account of shareholders who did not sell shares, will apply before the court regarding the transfer of ownership of shares to it. Therefore, no active efforts of shareholders are needed so far. It should be noted that this will not cause financial consequences to the shareholders, as the money for the shares will be transferred from the deposit account upon request.

How long does it take for Ignitis grupė to apply before the court to have the ownership of the shares of the shareholders who did not sell shares transferred to it?

For the purpose of ownership of Ignitis gamyba, within 30 days from the end of the mandatory buyout, i.e. 17 September. At present, the process of buyout of shares of ESO is suspended due to the claim brought before the court. The information on when the buyout of shares of ESO reopens will be provided in a separate notice.

How long will the proceedings take and when I cease to be a shareholder?

The Code of Civil Procedure does not set specific time limits for the settlement of these cases. Given the large number of stakeholders in these cases, the process can be lengthy. The cases are expected to be heard within 6 months. We will announce all relevant information about the ongoing court proceedings and their development on the website.

What amount will I receive for one share of ESO and one share of Ignitis gamyba if Ignitis grupė makes a payment to my as the shareholder’s who did not sell shares deposit account?

The shareholders who did not sell shares during the mandatory buyout will be offered the prices which are the same as those paid during the mandatory buyout. The price of EUR 0.880 per share will be paid for shares of ESO and EUR 0.640 per share for shares of Ignitis gamyba.

What steps do I need to take to receive payment for unsold shares?

The shareholders will need to contact SEB bankas and complete a request to transfer money for the shares to the specified cash account.

When I will receive money to my account for the redeemed shares of ESO and/or Ignitis gamyba?

Upon submission of the request to SEB bankas, the funds from the deposit account will be transferred to the cash account of the shareholder specified in the request within 5 business days from the date of submission of the request to the Bank accompanied by the information required for making a cash transfer.

Will I incur additional costs due to litigation?

No, the costs of court proceedings will be paid by Ignitis grupė.

How will proceeds transferred to my deposit account from Ignitis grupė for shares not sold during the mandatory buyout be taxed?

I. For an individual, who is the resident of the Republic of Lithuania (hereinafter – the LR), having sold the securities: the purchase price shall be deducted from earnings on the sale of securities, and the resulting gains generated on the securities that do not exceed 120 average wages, shall be subject to the personal income tax (hereinafter – the PIT) at a rate of 15%, and the gains that exceed 120 average wages, shall be subject to the PIT at a rate of 20%. These proceeds of the resident are classified as Class B proceeds, i.e. the PIT shall be calculated and paid by the resident himself/herself by submitting annual income tax return GPM308. Annual tax-free amount of EUR 500 may be applied to taxation of earnings from sale of securities, and such amount may be used by the LR individuals when submitting the annual income tax return.

II. For an individual (who is not the LR resident) having sold the securities: such sale of securities is not an object in Lithuania and, therefore, non-taxable. A company, having acquired securities from a foreign resident, shall declare as income of Class B in Annex U to the annual income tax return GPM312.

 III. For a legal entity of the LR having sold securities: whereas the shares sold do not carry more than 10% of the votes, the General Rules for the sale or other transfer of assets shall apply – the purchase price of securities shall be deducted from the proceeds from the sale, and the resulting proceeds from the increase in the value of the assets shall be subject to the PIT at a rate of 15%. The liabilities of taxation, payment of taxes and declaration lie with a legal entity that has sold the securities.

 IV. For a foreign legal entity having sold securities: a foreign legal entity shall tax the transfer of shares of LT company in its country in accordance with the legal requirements of that country. Proceeds of a foreign entity from the sale of securities shall not be subject to taxes withheld at source.

Can I challenge the judicial proceedings of Ignitis grupė regarding transfer of my holding of shares to it?

All shareholders who did not sell the shares will be admitted to the proceedings as third persons and, therefore, will be able to lodge a reply to the allegation presented by Ignitis grupė.

I did not sell the shares during the mandatory buyout due to force majeure reasons, can I still do it for the same price that was paid for the shares at the time of the mandatory buyout: the price of EUR 0.880 per share for shares of ESO and EUR 0.640 per

Regardless of the reasons, Ignitis grupė obtains the right to apply before the court regarding the shares of shareholders who did not sell shares during the mandatory buyout. Therefore, no active efforts of shareholders are needed. It should be noted that this will not cause financial consequences to the shareholders. The shareholders will need to contact SEB bankas and complete a request to transfer money for the shares to the specified cash account.

Does the proceedings brought before the court by the shareholder change the process of selling shares of ESO?

At present, the process of mandatory buyout of shares of ESO is suspended due to the claim brought before the court and the temporary protection measures applied. Although the shareholders selling their shares will not suffer financial losses, the process can be lengthy. The information on the reopening of the buyout will be provided in a separate notice.

Following the reopening of buyout of shares of ESO, the process, which would have lasted 90 days, will now be extended to 4 days – to the extent of the time remaining until 17 August, i.e. the day on which proceedings are brought before a court and the date of application of the temporary protection measures. The shareholders who have placed orders to sell shares will not need to do so again, everything will be updated automatically together with the information previously provided, unless the supervisory authorities decide otherwise.

I sold my shares through a mandatory buyout of shares. Will I have a pre-emptive right to acquire shares of Ignitis grupė during the initial public offering?

No, only the shareholders who sold the shares during the public buyout obtain the pre-emptive right to acquire the shares of Ignitis grupė during the initial public offering provided that they were shareholders of the companies on 17 March and did not challenge the proceedings. The minority shareholders of ESO and Ignitis gamyba, who sold the shares during the mandatory offer, have the opportunity to acquire shares of Ignitis grupė on equal terms with other market participants.