Lufthansa will proceed with a capital increase of 2.14 billion euros. The operation aims to raise funding from existing shareholders to strengthen the balance sheet and allow early payment of Germany’s stabilization measures, the German airline announced this Sunday in a statement.
“Since the beginning of the Covid-19 epidemic, the Lufthansa Group has taken decisive measures to enhance liquidity and restore its balance sheet. Today, the group is launching a capital increase of 2.1 billion to create a sustainable and efficient capital structure and allow repayment of the Economic Stability Fund of the Federal Republic of Germany,” he explains.
This capital increase will be made through the issuance of 597.7 million new shares at a price of 3.58 euros per share, which means a discount of more than 56% compared to the closing price of shares on the Frankfurt Stock Exchange on Friday, which was fixed. 821 euros.Existing shareholders will receive the right to subscribe for each share they own. Meaning, you can use this right to buy new stock or sell the rights and keep the proceeds, but you can see your shareholder’s position weakened.
Compared to the theoretical discounted price of rights, the offer represents a 39.3% discount, according to the company’s own calculations. The subscription period runs from September 22 to October 5, with rights trading starting on the same day but ending on September 30.
The transaction was fully approved by a consortium of 14 banks. At the same time, a number of BlackRock-related funds and managers entered into a subordinated agreement totaling 300 million, under which they pledge to exercise all subscription rights. The Lufthansa Board of Directors have also agreed to fully subscribe to the shares corresponding to the rights they will receive.
“The company will use the net proceeds to offset the silent participation 1 of the Economic Stabilization Fund of the Federal Republic of Germany in the amount of 1.5 billion euros by the end of 2021,” the airline says, adding that it plans to cancel lines of credit that are still available.
chief executive officer Karsten Spohr had already said in June that he intended to repay the money the company had received due to the pandemic before the elections in Germany (scheduled for September 26). Germany’s largest airline has received a €9 billion public support package, with the German state taking a 20% stake in the company’s capital.
After the capital increase, Lufthansa will own 1,195,485,644 common shares, double the current number of 597,742,822. The new bonds will have the same economic and voting rights, and are expected to begin trading on the Frankfurt Stock Exchange on October 11.
(Updated at 6:55 pm)
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