RIGA – On Nov. 30, Latvia’s Transport Ministry, using its pre-emptive rights, bought national airline airBaltic shares that previously belonged to Baltijas Aviacijas sistemas (BAS), a minority shareholder, which were pledged as security with Latvijas Krajbanka, reports LETA.
The Transport Ministry reports that the shares were acquired in order to protect the interests of the state pursuant to the Cabinet of Ministers’ Nov. 29 decision to accept Krajbanka’s offer to buy out airBaltic shares.
Also, this is to ensure efficient protection of Krajbanka depositors’ interests.
According to the government’s decision, Transport Ministry has bought 47.2 percent of airBaltic shares, which BAS pledged as security with Krajbanka, for the nominal value of 224,453 lats (319,370 euros). The state now holds 99.8 percent of airBaltic shares.
While making such a decision, the government took into consideration risks established by the financial consulting company Prudentia and the Transport Ministry regarding the further development of airBaltic and protection of state interests in the wake of the collapse of the Lithuanian bank Snoras and its subsidiary Krajbanka, as these two banks played a crucial role in guaranteeing the solvency of BAS.
According to an analysis by Prudentia, there is a substantial risk that BAS will not be able to honor its Oct.3 agreement with the government on increasing airBaltic share capital. The government decided to make sure that the financial problems of BAS do not affect the planned investments in airBaltic share capital, and to act proactively in order to protect the interests of the state, taking over the minority shareholder’s stake in airBaltic.
The Transport Ministry notes that the Oct. 3 agreement between the two airBaltic shareholders - the state and BAS - is still valid, and the state will continue to invest money in the airline in accordance with the airBaltic business plan, which is to be reviewed at the next government meeting.
Krajbanka’s income from the sale of airBaltic shares will be used for the payment of state-guaranteed compensation to the bank’s depositors from the Deposit Guarantee Fund.