Lithuania refuses nationalization offer

  • 2008-12-23
  • TBT Staff in cooperation with BNS
VILNIUS - The Lithuanian government has refused a proposal put forward by flyLAL, the country's flagship airline, to nationalize the company by accepting a 51 percent stake for the symbolic sum of 1 litas.

The group of businesses that put the proposal forward had also asked for a state-guaranteed loan of 30 millionto 35 million litas (8.78-10 million euros) that would be used to reorganize the company.

"The situation has become critical due to a shortage of funds," GediminasZiemelis, an indirect shareholder of FlyLAL, said at a news conference.

Transport Minister Eligijus Masiulis saidat a news conference, however, that he would not assume responsibilityfor the troubles of the company.

FlyLAL's shareholders have also proposed a package of measures to helpput the financially-troubled airline back on track.

The shareholders said that FlyLAL's debts not backed by assets wererunning at 89 million litas (EUR 25.8 mln), including around 47.5 millionlitas owed by the airline to its owners.

It is estimated that FlyLAL's bankruptcy would slice a billion litas offthe country's gross domestic product annually and would cost the statearound 30 million litas in lost tax revenue.