Germany’s Economic Stabilization Fund (WSF) has approved Deutsche Lufthansa Group’s stabilization package and loans of up to €9bn.
The WSF will make “silent participations” of up to €5.7bn in the assets of Deutsche Lufthansa, of which approximately €4.7bn is classified as equity in accordance with the provisions of the German Commercial Code (HGB) and IFRS.
The silent participation is unlimited in time and can be terminated by the company on a quarterly basis in whole or in part.
In accordance with the agreed concept, the remuneration on the silent participations is 4% for 2020 and 2021 and rises in the following years to 9.5% in 2027.
The WSF will also subscribe to shares by way of a capital increase in order to build up a 20% stake in the share capital of Deutsche Lufthansa. The subscription price will be €2.56 per share, so that the cash contribution will amount to about €300m. The WSF may also increase its stake to 25% plus one share in the event of a takeover of the company.
The stabilization measures are supplemented by a syndicated credit facility of up to €3bn with the participation of KfW and private banks with a term of three years. This facility is still subject to the approval of relevant bodies.
The expected conditions relate in particular to the waiver of future dividend payments and restrictions on management remuneration.
In addition, two seats on the Supervisory Board are to be filled in agreement with the German government, one of which is to become a member of the Audit Committee.
Except in the event of a takeover, the WSF undertakes not to exercise its voting rights at the Annual General Meeting in connection with the usual resolutions of ordinary Annual General Meetings.
The stabilization package still requires the final approval of the Management Board and the Supervisory Board of the company. Both bodies will come together shortly to adopt resolutions on the stabilization package.
The capital measures are subject to the approval of an extraordinary general meeting.
Finally, the stabilization package is subject to the approval of the European Commission and any competition-related conditions.
