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Budget bill earmarks HUF 13.75 bln state capital injection for Malév

The 2011 budget bill contains HUF 13.75 billion for a capital raise at the national carrier Malév.

Hungarian national asset management company MNV could be obliged to use the bulk of the HUF 14.37 billion earmarked for accumulation expenses at the companies under its authority towards the settlement of Malév Zrt's capital position, the explanation of the bill said.

The Hungarian government announced on September 24 that the state will raise Malév's capital by a combined HUF 14.7 billion partly by converting loans into equity and partly through cash payment. The HUF 5.3 billion cash capital raise was carried out from the general reserves of the budget.

Malév received a HUF 2.16 billion shareholder's loan from MNV at the time of Hungary's previous MSzP-controlled Bajnai government and another HUF 5.7 billion liquidity loan in September since it was renationalized by the previous government in March 2010 .

The Hungarian state acquired 95pc of shares through a capital raise worth HUF 25.4 billion in the March 2010 transaction, including HUF 20.7 billion in cash with debt-to-equity conversion accounting for the remainder. The remaining stake remained in the ownership of Hungary-based Airbridge in which the Russian state-owned Vnesheconombank holds a minority stake.

National Development Minister Tamás Fellegi said in parliament in June that Malév will need more than HUF 30 billion in addition to supplemental capital over the next two years. Malév had losses of HUF 25 billion last year.

Prime Minister Viktor Orbán told MTI during his visit to China earlier this month that he had held talks with Hainan Group chairman Chen Feng regarding the establishment of a Hungarian airline and the conversion of Malév. Hainan had expressed interest in Malév during its privatization process closed in the spring of 2007, but finally did not make a bid. (MTI – Econews)