BAS risks airBaltic share forteiture

  • 2011-11-30
  • From wire reports

RIGA - If Baltijas Aviacijas Sistemas (BAS), the private shareholder in Latvia’s national airline airBaltic, fails to provide a loan to the airline, as agreed, BAS will have to sell all of its airBaltic shares to the state for one lats (1.42 euros), as provided for in the airBaltic shareholders’ agreement, reports
A copy of a report on the secret agreement between the airBaltic shareholders and creditors that has been obtained by, stipulates that if BAS fails to honor its liabilities, airBaltic creditors will also have to sell all their claims on the airline and BAS to the state for one lats.

“Public joint-stock companies have been forced to sign an agreement which states clearly that, if BAS is unable to honor its liabilities, the banks will sell all their claims on airBaltic to the government for one lats. We are still trying to determine the total amount, but it appears to be over 100 million euros. Of course, neither [Prime Minister Valdis] Dombrovskis, nor [former majority owner of Lithuanian Snoras bank Vladimir] Antonov have reported this unaccounted-for liability, to either [Financial and Capital Market Commission’s head Irena] Krumane, nor to the Lithuanian authorities, although it is clear that if this happens, both banks will immediately lose that capital,” says the report posted at on Nov. 29. It appears that the report has been drawn up by some law offices and it deals with the current developments in Latvia.

BAS was unable to state clearly during the airline’s shareholders meeting if it had the necessary funds for an airBaltic share capital increase, as Transport Ministry State Secretary Anrijs Matiss said after the meeting on Nov. 28. BAS has until Dec. 15.
“I had the impression that the private shareholder was still looking for money,” he said.

If BAS fails to make the investment it is required to make, the proportion of shares held by BAS and the state will change. It has not been decided yet if the state will invest 37 million lats in airBaltic share capital instead of BAS. If the state decides against investing the additional money in the airline, airBaltic development plans will have to be revised.
The investment that the state has to make in airBaltic share capital is 41.6 million lats.

The agreement on increasing airBaltic share capital, signed by the airline’s shareholders on Oct. 3, stipulates that the state and BAS would jointly invest 153 million euros into the money-losing airline’s share capital to prevent collapse and buy time to try and come up with a development plan. The agreement was also signed by the airline’s creditors including the Lithuanian bank Snoras and Latvijas Krajbanka.

With around 100 million lats missing at Krajbanka, uncertainty hovers about the ability of BAS to honor its liabilities regarding the share capital increase.