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Malév buyer to take over debt, Hungarian FinMin says - extended

AirBridge Zrt, an investment vehicle for OAO KrasAir co-owner Boris Abramovich, is expected to take over the full debt of Hungarian airline Malév Zrt when it buys the carrier, Finance Minister János Veres said today. Transfer of some Malév assets to state could lower price of airline.

The government, which expects to conclude the sale to AirBridge this month, will transfer Malév's assets to a state-owned holding company as collateral for the debt payment, Veres said on public television's breakfast show in Budapest today. Malév has about Ft 30 billion ($153 million) of debt. Hungary selected the Abramovich-led group for final talks to sell the unprofitable airline on January 25. This is the government's seventh attempt to sell the carrier, after having spent Ft 16.2 billion to save it from bankruptcy in the past six years. Malév's assets, including its planes and brand name, are worth several tens of billion forint, Veres said today. The government will require the buyer to pay an annual usage fee until the company's debt is paid up, he added.

A proposal accepted by the government to place some assets of airline Malév with a state asset manger will not affect the size of the guarantee Airbridge, the company negotiating to buy Malév, has agreed to put up, nor will it create additional costs, but it could affect the airline's price, Veres said after a cabinet meeting on Wednesday. The government accepted at the meeting a proposal to transfer some of the assets of Hungarian airline Malév to a state asset manager and charge the airline a fee for their use. The proposal, made by the board of the State Privatization and Holding Company (ÁPV), would provide the state with a means to gradually recover Malév's stock of state-guaranteed loans, Veres said.

Veres said the government had agreed to allow ÁPV to negotiate further with Airbridge on which of the airline's assets should be transferred to the state. The transfer of the assets would require government approval, he noted. Veres said the construction would not affect the size of the guarantee agreed on by the buyer, nor would it mean more costs for the buyer. However, he would not exclude the possibility that the price of the airline could change depending on the value of the assets transferred to the state. Veres termed a February date for the closing of Malév's privatization "realistic". (Bloomberg)