Bank Crash Gives Latvia Control Of airBaltic
Published: December 2, 2011
Latvia has taken complete ownership of formerly part state-owned airline airBaltic after the collapse of a local bank and is looking for a strategic investor, the Transport Ministry said on Thursday.
The stake in the loss-making carrier had been held as collateral for a loan to the former minority shareholder, Baltic Aviation Systems (BAS), but the bank making the loan has now collapsed and is being run by state regulators.
The government said it bought the 47.2 percent stake from BAS at a nominal cost of 224,453 lats (USD$ 432,800), taking its holding to 99.8 percent.
“Now the government’s and the company’s task is to look for a strategic investor so that the company can strengthen its position on the market,” Transport Minister Aivis Ronis told a news conference.
Under an October deal to help the struggling airline, the government and BAS agreed to inject LVL107 million lats (USD$ 206 million) of fresh capital in tranches into airBaltic.
BAS was due to pay a tranche of LVL37 million lats by December 15, but its main creditors – Lithuania’s Snoras and Latvijas Krajbanka — have been shut down amid allegations of fraud.
The Transport Ministry said in a statement it decided to take the airBaltic shares to protect the state’s interests.
Bahamas-based Taurus Asset Management Fund and the former chief executive of airBaltic jointly own BAS. BAS acquired airBaltic shares from Scandinavian airline SAS in 2009.