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Agreement officially signed on bail out of airBaltic

Alla Petrova, BC, Riga, 04.10.2011.Print version
The Transport Ministry called a press briefing this afternoon to announce that an official agreement has been signed on bailing out the national airline airBaltic.

According to the airBaltic shareholders'- the state and Baltijas aviacijas sistemas (BAS) – agreement, the unfavorable (for the state) shareholders' agreement is annulled and the necessary investments (about LVL 100 million) in the airline's capital, made.


The state's investment is LVL 57.6 million, informs LETA.

The new agreement ensures state control over the airline.


The agreement was signed by Transport Minister Uldis Augulis (Union of Greens and Farmers), BAS, creditors Latvijas Krajbanka, Bankas Snoras, Investbank, Taurus Asset Management Fund Limited, Transatlantic Holdings Company S.A. and KD Jet.


According to previous media reports, Latvijas Krajbanka and Snoras are airBaltic creditors, Investbank is associated with Snoras shareholders", Taurus Asset Management Fund Limited is one of the BAS shareholders, where Russian citizen Andrei Rudeshko is the actual beneficiary. Transatlantic holdings Company is the entity that previously announced buying 59,110 airBaltic shares (the so-called SAS stake) for EUR 9,622 million.


KD Jet, which was first mentioned yesterday, is a company with offices in the same building where airBaltic subsidiaries are registered, 10 Biroju Street in Riga. KD Jet was registered in 2005, its share capital is LVL 2,000. The company fully belongs to Lithuanian company Lionera. According to information available on the Internet, KD Jet may be associated with airport ground handling company "North Hub Services", which is co-owned by BAS.


The new agreement provides for such huge penalties that none of the parties to the agreement will want to breach it, stressed Augulis.


The initial contribution of LVL 30 million to airBaltic shareholder is expected in two weeks.


Consulting company Prudentia representative Karlis Skrastins stressed that both airBaltic shareholders will invest around LVL 100 in the airline's share capital altogether. Initially, LVL 30 million will be provided as a loan, whereas later both shareholders will invest a total of LVL 100 million in the airline's share capital in proportion to their stakes in airBaltic.


Augulis said that airBaltic sole board member Bertolt Flick would most probably be dismissed on Tuesday, when airBaltic shareholders meeting will take. Augulis did not reveal the government's candidates to work on airBaltic council, which will later appoint a new three-member board for the airline.


Further investments in the airline will be supervised by the Transport Ministry and Prudentia. The financial flows will be supervised until the situation in airBaltic stabilizes.


Augulis also stressed yesterday that all information provided by BAS had been checked to verify its true beneficiaries. It is also clear now that BAS is solvent.


According to the agreement, the state will proportionately participate in increasing airBaltic share capital – by October 14, the state is to loan airBaltic LVL 16 million on several conditions: airBaltic must retract its petition for legal protection submitted to the Riga District Court, the 59,110 SAS shares must be annulled, and a new version of airBaltic charter must be approved.


The agreement stipulates that the consolidated airBaltic shareholders agreement signed on April 30 will be terminated. A new council will be appointed for the airline, which will appoint a new three-member board. airBaltic CEO Bertolt Flick will be dismissed.


The airBaltic brand must be returned to the airline.


The agreement stipulates that BAS must provide LVL 14 million to airBaltic. The airline's liabilities to BAS will be consolidated, consolidated will also be the subsidiaries of airBaltic and BAS, and the outsourced services will be given back to airBaltic. A restructuring plan and a new business plan must be drawn up for the airline in two months.


The agreement says that if all the conditions are met, the share capital of airBaltic will be increased, where the state investment will total LVL 57.6 million.


The state funding will be provided as a loan from the State Treasury, with the possibility that at least some part of it could be capitalized. Part of the funding will be used for modernization of the airline's fleet.

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