SAS considers converting loan

  • 2006-05-17
  • From wire reports
RIGA - In order to become a majority shareholder in Latvia's airBaltic, Scandinavian-owned SAS has hinted that, if permitted, it will convert a loan previously granted to the Latvian state for setting up the airline. Transport Minister Krisjanis Peters told the Dienas Bizness daily that by converting the loan, the Scandinavian company could increase its stake in airBaltic from 47 to 54 percent. But the minister added that the Latvian government was not prepared to allow SAS to raise its stake in airBaltic to a majority one.

Yet by law, the government cannot prevent SAS from doing namely that. SAS representative Sture Stolen told the newspaper that the state, which is majority owner in airBaltic, should send a clear signal whether it wants to repay the debt in cash or in shares and thus allow SAS's board to decide on further steps.
SAS had previously voiced its wish to acquire a majority stake in airBaltic, while government ministers have been at odds what to do. For instance, former Transport Minister Ainars Slesers was willing to cut a deal with SAS, while former Economy Minister Krisjanis Karins said the time for giving up the majority stake in airBaltic had not yet come.
By law, SAS could apply to the Latvian Privatization Agency for the airBaltic stake, but so far the Scandinavian company has not done this.

Specialists at the Justice Ministry and the State Chancellery have until the end of May to decide how to list the previously unaccounted $4 million loan, which was taken to set up airBaltic.
The State Auditor's Office discovered the loan last October, and the news triggered a wave of consternation both among government officials and the mass media.
Last year, airBaltic posted 84.6 million lats (120.4 million euros) in sales, a 64 percent rise year-on-year, and incurred a loss of 1.32 million lats, which was 55 percent more than in 2004.
AirBaltic, established in 1995, is owned by the Latvian state (52.6 percent) and Scandinavian Airlines (47.2 percent).