...expanding the state's economic activity in the border region is a decision of both economic and strategic importance.

Last weekend, changes were registered in the Register of Enterprises (UR) under which JSC “Latvijas valsts meži” (LVM) became the owner of two Latvian-registered companies whose sole asset is land, and which had previously been owned by Swedish citizens. Under the relevant legislation, the acquisition of the companies required the consent of the Cabinet of Ministers, which LVM received on 30 June this year.

As a result of the investment deal, almost 5,000 ha of productive forest land in Pasiene parish, Ludza municipality, comes under LVM's management, which will strengthen the sustainability of state forest management and, in the long term, provide additional quality timber resources for Latvia's economy.

For a total investment of EUR 26.385 million, or an average of EUR 4,500 per hectare, land covering 5,800 ha has been acquired, of which 4,800 ha is forest. In the acquired forest property, the dominant tree species are spruce (around 1,600 ha), birch (around 1,500 ha) and pine (around 600 ha), with other tree species growing on the remaining area. About 80 ha of the forest area is protected territory. A further 600 ha is agricultural land.

Minister for Agriculture Uldis Augulis: “This is a deal with a large-scale impact on sustainable forest management, regional economic development and also security. Managing large forest areas means long-term, stable demand for local services, providing work for Latvian companies, stable incomes for Latgale families and greater economic activity in Latvia's eastern border region. It is particularly significant that these forest areas are located in Latgale – strengthening the state's presence and economic activity in this region is essential for economic development and national security. In the coming years, active management of these forests will already create well-paid jobs for local residents and orders for Latvian companies in forestry, timber harvesting, transport and other related sectors. Every euro invested in the region means not only investment in forestry, but also investment in Latgale's economic development.”

According to LVM's long-term forestry plan, it is forecast that over the next 120 years of the forestry cycle it will be possible to obtain around 3.45 million cubic metres of quality timber from these areas, as well as energy wood chips, making a significant contribution to Latvia's economy and to strengthening its independence. In the years ahead, LVM will carry out stand tending, forest protection measures and other forestry work on the acquired property, in order to increase forest productivity and grow the forest's capital value, as well as to ensure the use of forest resources for future generations.

LVM has been purchasing land from private individuals and legal entities since 2007, but this is the largest purchase in the company's history, covering almost 5,000 hectares of forest stands compactly located in a single region. LVM's forestry experts carried out a thorough assessment of the property, analysing the current condition of the stands, their development potential, location, accessibility, economic restrictions and economic return. The acquired property mainly consists of productive forest land with quality stands of various ages.

SIA “ZAB Eversheds Sutherland Bitāns” and SIA “KPMG Baltics” took part in structuring the deal, assessing risk, conducting due diligence and verifying the portfolio price. In the forest sector in the Baltic Sea region, it is standard practice to structure large-scale land acquisitions as a purchase and sale of shares, rather than as the acquisition of hundreds of individual real estate properties. LVM will merge both acquired companies into LVM through a reorganisation process.