On Tuesday, the government decided to participate in the purchase of bonds of the Latvian national airline “airBaltic” worth up to 136 million euros, Minister of Transport Kaspars Briškens (P) said at a press conference on Tuesday after the government meeting.
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The state could purchase these bonds under the same conditions as private investors and in an equivalent amount, Brishken said. Bond investments of this type will be in accordance with market rules and the conditions of European Union (EU) state aid.
The purchase of the company’s bonds will bring economic benefits to the state in the long term, as the state and private investors will receive quarterly interest payments. It is tentatively expected that “airBaltic” will open bond purchase offers next week.
Briškens explained that the government decided to participate in the issue of bonds worth up to 136 million euros, because “there is a clear economic contribution from interest payments that the state would receive in the same amount as private investors, as well as it would significantly promote the development of the Latvian capital market”.
“The state would be involved not only as an investor in the financial sector, but also in strategically important state-owned enterprises,” Brishken said.
Last week, the Saeima adopted the government-directed amendments to the “Law on the Budget and Financial Management”, with which the Minister of Finance is authorized, with the support of the Saeima and the government, to use state budget funds for the purchase of fixed income securities of capital companies in which the state has a decisive influence.
The Ministry of Transport stated that the purchase of “airBaltic” bonds would have no impact on the budget deficit.
The total value of the planned bonds to be purchased by the state is up to 136 million euros. From the mentioned amount, the debt of the “airBaltic” company to the State Treasury in the amount of EUR 36 million would be converted into new bonds.
Bryshken noted at the press conference that “the state does not invest to stimulate other investors, but the state is considering investing on symmetrical terms with private investors, while receiving income from profits.”
At the same time, Brišken noted that the final decision will have to be made in the Saeima.
On Monday, Finance Minister Arvils Asheradens (JV) admitted after the coalition meeting that the state “airBaltic” bonds worth no more than 100 million euros could be purchased.
It has already been reported that the Saeima recently adopted the government-directed amendments to the “Law on Budget and Financial Management”, with which the Minister of Finance is given the authority to use state budget funds with the support of the Saeima and the government for the purchase of fixed income securities of capital companies in which the state has a decisive influence.
Transport Minister Kaspars Briškens (P) has noted that the adopted changes will enable the state to participate in the bond issue of the Latvian national airline “airBaltic” alongside and under the same conditions as international private investors.
On the other hand, Finance Minister Arvils Asheradens (JV) has emphasized that such purchase of bonds of state capital companies, which the state could make on the same terms as private investors, does not create pressure on the state budget deficit. At the same time, Asheraden pointed out that the purchase of such bonds can only be financed by borrowing, so this would increase the amount of borrowed money.
It has already been reported that in July 2024, the maturity date of the 200 million euro bonds of the Latvian national airline “airBaltic” will expire, so the airline is looking for external financing to refinance the bonds, and the company also plans to attract additional financing in the amount of about 100 million euros.
“The airline plans not only to refinance 200 million euros, but also to attract an additional 100 million euros, in order to improve the cash balance and facilitate the financing of further capital investments related to increasing the company’s capacity,” the airline’s 2023 annual report explains.
The audited turnover of “airBaltic” last year was in the amount of 664.289 million euros, which is 33.2% more than in 2022, and the company also made a profit in the amount of 33.852 million euros, in contrast to losses the year before.
The Latvian state owns 97.97% of airBaltic’s shares, while “Aircraft Leasing 1” owned by the financial investor, Danish businessman Lars Tūsen, owns 2.03%.
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Tags: state decided buy bonds national airline airBaltic worth million euros
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