The Saeima agrees to the state’s participation in the purchase of “airBaltic” bonds in the amount of up to 100 million euros

The Saeima decided today to agree to the state’s participation in the purchase of bonds of the Latvian national airline “airBaltic”.

According to the request of the Minister of Transport Kaspars Briškens (P), the Saeima agreed that the Minister of Finance will purchase bonds of “airBaltic” in the amount of no more than 100 million euros or equivalent.

It is determined that in this case the amount of state investment against “airBaltic” will not exceed 136 million euros or an equivalent amount.

LETA announced that from the mentioned amount, the debt of the “airBaltic” company to the State Treasury in the amount of 36 million euros would be converted into new bonds.

The Minister of Finance will purchase the bonds in accordance with the recently adopted amendments to the “Law on Budget and Financial Management” and the positive decision already adopted by the government.

The state will participate in the implementation of the investments specified in this decision on the same terms and to the same extent as private investors.

As reported, the government decided on Tuesday to participate in the purchase of “airBaltic” bonds worth up to 136 million euros, the Minister of Transport said at the press conference after the government meeting. 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 “the economic contribution from the interest payments, which 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, is clearly visible.”

“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 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.

The Ministry of Transport stated that the purchase of “airBaltic” bonds would have no impact on the budget deficit.

Bryshken noted at the press conference that “the state does not invest to stimulate other investors, but the state is considering the possibility of investing on symmetrical terms with private investors, while receiving income from profits”