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Malév renationalized

The state of Hungary has reached an agreement to acquire a 95% stake in national carrier Malév through a HUF 25.2 billion capital raise, including cash and the conversion of debt, the Finance Ministry told MTI early Saturday.

Under the terms of the agreement, reached between Finance Minister Péter Oszkó, representatives of Russia’s state-owned Vnesheconombank and former Malév majority owner AirBridge late Friday evening, AirBridge will retain a 5% stake in Malév.

The Finance Ministry said the change of ownership was being carried out through a reduction in Malév’s equity followed by a capital raise.

Vnesheconombank remains one of Malév’s biggest creditors, but the agreement “fundamentally changes” the bank’s role from that of owner to creditor, the ministry said.

The agreement is the result of a series of long negotiations, the ministry said. In the course of the talks, the state always aimed to “to assert the interests of the country, ensuring the continuation of the operability of the national carrier” while complying with domestic and European Union regulatory criteria.

The ministry said the National Asset Management Company (MNV) initiated a call-down of a €32 million bank guarantee undertaken by Vnesheconombank and the bank is fulfilling this obligation. As part of the agreement, the bank is swapping Malév loans undertaken under relatively unfavorable conditions for more favorable loans with lower rates.

The agreement opens the way for the creation of financial stability for the operation of the airline, but Malév’s ongoing restructuring program must be continued in order that the bailout of the company use the least taxpayer money as well as to prevent the EU from assessing the measure as prohibited state support.

The aim of the program is to make Malév profitable by 2012 at the latest. “In order to achieve this, further tough measures can be expected in the operation of the company including, for instance, restructuring of the network, further layoffs, renegotiation of agreements with trade unions, and renegotiation of supplier contracts,” the ministry said.

Martin Gauss will continue as CEO of Malév. (MTI-Econews)