The German State became a shareholder of Lufthansa

L’État allemand devient actionnaire de Lufthansa

Photo: Matthias Schrader, Associated Press
Nearly 700 of 760 aircraft in the Lufthansa group are currently nailed to the ground.

Lufthansa and the German government reached an agreement on a bailout of 9 billion euros that will see the State become the first shareholder of the group, with 20 % of the share capital, in order to avoid the bankruptcy of the giant of the air transport.

The government, who makes his return to the capital of the company after 20 years of absence, has approved the plan through the fund of economic stability of the federal government (WSF), created to cushion the impact of the pandemic of sars coronavirus. “The executive board supports the package of measures, which must still be approved by the european Commission and an extraordinary general meeting of shareholders.

The agreement comes after lengthy negotiations on aid, while the company, like the entire airline industry going through an unprecedented crisis. In detail, the State will, within the framework of a capital increase, to acquire 20 % of the group for 300 million euros, 2,56 euros per share, a price well below the market price, which is supposed to guarantee to Berlin return on investment. It will also be injected to € 4.7 billion of fund without the right to vote in the context of a ” silent participation “, on which Lufthansa will pay a interest progressive ranging from 4 % in 2020 and 2021 with 7.5% in 2027, shows the group in a press release.

For 1 billion of additional capital, Berlin has the option to increase its interest to 25 % and one action, either a blocking minority under German law. The convertibility may be exercised “in the event of a public purchase offer by a third party” and would cause it to fail. The State also gets two seats on the supervisory board of Lufthansa, but waives its right to vote at general meetings except in the case of an offer to buy “.

In addition to a loan of 3 billion euros for the group, which will be prohibited from paying dividends to its shareholders. For the year 2019, Lufthansa had already suspended the remuneration of its shareholders to preserve its solvency.

The WSF needs to sell its investments at market price by December 31, 2023 if the group repaid the funds injected, says Lufthansa.

Currently, nearly 700 of 760 aircraft of the group are nailed to the floor and, in April, Lufthansa has transported over 3000 passengers compared to 350 000 before the crisis. In the first quarter, the operating loss amounted to 1.2 billion euros and is expected to be even more heavy over the following three months.

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