Uruguay seeks new investor for Pluna after Leadgate’s withdrawal

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Published: June 19, 2012

The government of Uruguay has reassumed control of Pluna, the nation’s principal airline, after the carrier’s controlling shareholder Leadgate announced that it will withdrawal from the ownership structure of the company.

After several weeks of growing tensions between the Uruguayan government and Leadgate over the urgent need to recapitalise the Montevideo-based airline, Pluna CEO Matias Campiani finally announced his resignation last Friday after it became clear that Leadgate would not inject further funds into the company.

Pluna Ente Autonomo, the autonomous state body that manages the government’s 25% stake in the airline, confirmed the appointment of former CFO Sebastian Hirsch as Pluna’s new interim CEO on Monday in an attempt to assure a smooth transition for the airline.

While Pluna was unavailable for comment, a source at the Uruguayan ministry of Transport confirms that Leadgate transferred its 75% stake to the Uruguayan Stock Exchange, which will “act as fiduciary” until the government determines a game plan. Leadgate’s departure took place after the government agreed to sign a contract under which “both sides renounce [plans] to pursue any legal processes against each other”.

The ministerial source quantifies the immediate recapitalisation needs as being “in the range of $ 30 to $ 35 million,” while the total debt load has reached “around $ 300 million.” Most of the financing for the airline’s 13 Bombardier CRJ900s, which were acquired by Pluna under Leadgate’s management, has been guaranteed directly by the Uruguayan state, while Export Canada provided guarantees for Pluna’s aircraft purchases in 2010 and 2011 that were no longer covered by the Uruguayan state.

The Canadian airline holding company Chorus, which owns up to a 35% stake in Leadgate as well as Jazz, has the rights to acquire the remaining Leadgate shares. If this occurred, the holding company would have 30 days to reverse the decision to exit the stake in Pluna.

However, Chorus has been quoted saying that it has “no intention to invest additional funds,” according to local Canadian reports.

The source at the Uruguayan ministry of transport says, that it will “respect Jazz’ [Chorus’] 30 day exclusivity period” to acquire the share package before beginning negotiations with other potential investors.

Uruguayan sources familiar with the process say that the government has contacted both Spain’s Air Europa and Argentina’s Buquebus, which owns Uruguayan ATR operator BQB Air. However, Air Europa denies having any interest in Pluna, leaving Buquebus-BQB, which has an excellent relationship with the Uruguayan government according to reports, as a potential bidder for the Leadgate package.

A senior source at Buequebus’ Buenos Aires headquarters expresses doubts that the carrier’s owner Juan Carlos Lopez Mena “would want to pour $ 30 million into a loss-making carrier and shoulder a more than $ 200 million share in Pluna’s debt load only to acquire an airline in a country in which he already runs an airline.”

However, Lopez Mena might want to help the government as his ferry and Montevideo port terminal concessions have proven vastly profitable. He has also repeatedly tried to become a major player in the airline market in the southern cone with several failed bids for Aerolineas Argentineas.

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