The National Asset Management Council (NVT) decided on Wednesday that Malév Asset Management Kft is to take immediate measures vis-a-vis Vnesheconombank in order to enforce the €32 million bank guarantee drawn down in April 2009.
The enforcement of the bank guarantee has become necessary because of failure to fulfill commitments arising from the privatization agreement.
NVT has invited the CEO of the Hungarian National Asset Management Company (MNV) to instruct Malév Asset Management Kft to not initiate enforcement of any of its claims against Malév before February 26, MNV said on Wednesday.
On the other hand, the CEO of MNV should immediately initiate enforcement of its claims against AirBridge Zrt.
Under the privatization agreement signed on February 23, 2007, AirBridge, 49% owned by Russian businessman Boris Abramovich, paid HUF 200 million for a 99.95% stake in Hungary's national carrier and promised to raise registered capital by at least €50m.
AirBridge was to either repay a HUF 13 billion loan by December 31, 2007 or refinance it, allowing the state to withdraw its guarantee on the loan. MTI learnt that that this commitment was fulfilled by AirBridge.
As collateral for the Hungarian Development Bank's (MFB) state-guaranteed HUF 20 billion loan, certain assets of Malév were transferred to the state pending the loan's repayment. AirBridge also provided a €32 million bank guarantee from Russia's state-owned Vnesheconombank.
The privatization agreement was to be performed by deferred settlement, for which reason the 100% state-owned Malév Asset Management was established to take over the HUF 20 billion MFB loan from Malév with the Malév brand name, Malco LLC, which owns the single Boeing 767 aircraft, and the section outside of the airport of the kerosene pipeline between Szazhalombatta-Ferihegy, for which Malév pays rental and usage fees. Principal payment for the MFB-loan will be due in a lump sum at the end of 2017, with interest paid by Malév Asset Management from the fees collected from Malév. At the end of 2008, Malév already had debts of at least HUF 600 million to Malév Asset Management from these fees. The Hungarian National Asset Management (MNV) then provided a shareholders' loan of €2.2 million to Malév Asset Management to help it avoid having to pay default interest for the MFB loan repayment.
Of the privatization commitments, AirBridge raised Malév's registered capital by €20 million in cash simultaneously with the share sale, and the capital injection of a further €30m was also carried out with the guarantee of Vnesheconombank, though with Malév shares used for collateral, MNV CEO Miklós Tátrai told MTI at the end of 2008. This was not entirely in line with the privatization agreement, Tátrai conceded, adding that the possibility of using the shares as collateral was a shortcoming of the privatization agreement. Malév repaid by the end of last year the project loans it had taken out with state guarantee with the exception of part of the EIB loan.
MNV will wait two weeks for the €32 million bank guarantee of Vnesheconombank and it will then take legal steps to enforce the bank guarantee, MNV CEO Miklós Kamarás told MTI on Wednesday.
Malév's short-term financing is helped by the fact that MNV has given Malév until February 26 to settle its debts. Malév owes around HUF 6.5 billion to MNV and MNV-owned Malév Asset Management.
The CEO also said that under the Hungarian government's proposal Malév's registered capital will be reduced in order to allow the Hungarian government acquire a majority stake in the company. The capital raise will be carried out by converting the debts into equity. The debts cannot be transformed into tangible assets, Kamarás said, but cash must be injected into Malév, which has to be used to pay the tax debts of HUF 17 billion – HUF 18 billion. (MTI-Econews)