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UPDATE - Malév receives HUF 18.5 bln capital injection

A Tuesday EGM of Hungarian national airline Malév decided to raise the company's capital by HUF 18.5 billion, Malév’s main owner, the Hungarian National Asset Management Company (MNV), announced.

The MNV said it would swap HUF 9.98 billion in loans and their market-rate interest, provided pursuant to 2010 credit contracts, as an in kind contribution, into equity. It will also provide HUF 8.52 billion as contribution in cash.

The government will provide the resources for the latter contribution via the reallocation of resources from the 2011 budget under a resolution announced in the official gazette Magyar Közlöny on Monday.

Malév posted losses of HUF 24.56 billion last year. The loss dropped just HUF 275 million from a year earlier.

Malév finished 2010 with negative net assets of HUF 22.5 billion, and it had until the end of August to raise capital to mend its capital structure.

The current move is the second part of a two-step capital raise announced in June this year, when MNV approved the injection of HUF 4.5 billion in cash into the airline.

Already in early April MNV provided the airline with a HUF 2.5 billion capital injection, most of which went into capital reserves.

Malév was renationalized in March 2010, but Russia's state-owned Vnesheconombank still holds little less than 5% of the airline's parent company.

Vnesheconombank is also financing Malév, which owed the Russian bank €120 million according to information from the end of last year.