Shares in Nasdaq OMX-listed Tallinna Vesi staged a relief rally earlier this week after the local administrative court suspended the immediate imposition of a 29% tariff cut which had previously been prescribed by the Estonian competition authority.

¡°The court has basically given the best possible decision the company could have hoped for,¡± said Pavel Lupandin, an analyst at SEB Enskilda. Alhough the market had been pricing in a near-term tariff cut, the fact that the case could now take several years to resolve implies at least a degree of short-term dividend protection.

Lupandin estimates that the tariff cut, should it be fully imposed, would effectively halve Tallinna Vesi¡¯s EBITDA, whilst boosting its debt-to-EBITDA ratio to an uncomfortable 6x.

The regulator now has the right to appeal the administrative court¡¯s decision.

Tallinna Vesi generated 2011 net income of €21.5 million (up 31.1%) on revenues of €51.2 million (up 3.1%).