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Malév EGM to decide on capital position on Tuesday

Shareholders of the Hungarian airline company Malév are to decide on settling the company's capital position at Tuesday's EGM if agreement is reached at the ongoing Hungarian-Russian talks by then.

Negotiations have been continuing since the Budapest session of the Hungarian-Russian Intergovernmental Economic Committee on January 29, the Finance Ministry's spokesman told MTI at the weekend, but he could not say whether a decision would be taken at the EGM, suspended on January 29 until February 9. According to information given to shareholders, registered capital will be decreased from HUF 400 million (€1.46 million) to HUF 4 million, while a decision will be taken on a capital raise with the participation of the Hungarian government at the same time.

The intergovernmental committee discussed the issue of the settlement of Malév's capital position on January 29, but no agreement was reached.

A capital injection is necessary because of the company's accumulated debts and losses.

The government has decided on its participation at the end of December and said it would refrain from calling down a €32 million guarantee included in the privatization contract of Malév if Russian state-owned Vnesheconombank (VEB) signs by January 31, 2010 the agreements which would secure the majority stake in Malév to the government and further finance the airline's operations by providing a medium-term loan with interest of no more than 5pps over EURIBOR as part of the agreement.

Malév is 99.95% owned by AirBridge Zrt. Airbridge's 51% belongs to a Hungarian private person, and 49% to VEB. Te remaining 0.05% of Malév is owned by retail investors. (MTI-Econews)