Prudentia reminds about their role in the process of finding an investor for airBaltic

April 1, 2016

Riga, 1st of April, Leta. The concluded deal about national airline “airBaltic” between Ralf-Dieter Montag-Girmes (a German investor introduced by “Prudentia”) and Latvian state on 132 million is beneficial, taking into account the complicated environment in the aviation sector, because elsewhere in the Europe investors even receive a premium, considers Kārlis Krastiņš (chairman of the board in “Prudentia”).

Though he does not comment whether the discussions with “airBaltic” on the commission payment for the investor attraction has been started.

The investment by Montag-Girmes will allow “airBaltic” to continue their growth in Riga, Vilnius and Tallinn airports and “to become a Baltic champion”, besides it can facilitate the growth of Latvian economy.

Krastiņš considers, that the attraction of the investor is advantageous, because the aviation industry in the Europe is still in a complicated conjuncture. A negative effect comes from the stagnation within the European economies, fragmentation of the market, sanction between European Union and Russia, lobby battles on the regulations and terrorism, on the other hand there are positive effects – low oil prices and more rapid economic growth in recent European Union countries.

With these circumstances the terms in merger and acquisition market in the aviation sector are dominated by the buyers, many aviation companies are willing to attract an investor or to merge. At the same time, Polish national airline LOT and Slovenian “Adria Airways” are trying to attract an investor, the discussions on this are also conducted in Finnish “Finnair”, also the government of Estonia, after the bankruptcy of “Estonian Air”, are desperately eager to reanimate a new company in the form of “Nordic Aviation Group”. In the stock markets the value of an aviation business is around 30-40% of their revenues.

For example, in Slovenia the government in March sold 96% of “Adria Airways” shares to a German investment fund for 100 000 euro. The government invested three millions in the equity of the company, whereas the investor invested one million. “It can be said, that the government of Slovenia paid to the investor, so that the investor buys this aviation company,” said Krastiņš.

He considers, that in the previous five years “Prudentia” has facilitated the salvage, stabilization and growth of “airBaltic”, and he is delighted, that the work has led to an essential deal.

As reported, the Minister of Transport Uldis Augulis (ZZS) considers, that “airBaltic” must pay to ex-consultant “Prudentia” for the attraction of the German investor in the case if the agreement between both parties includes such a condition. The agreement is confidential. “Contractual obligations must be respected by both parties – that is why it is an agreement. This applies to every agreement”, emphasizes Augulis.

Previously Krastiņš believed, that “Prudentia” will receive a commission for attracting the investor to “airBaltic”, because the company has an agreement with the airline.

He also explained, that “Prudentia” has a valid contract with the airline, which is in accordance with international standards. “No comments will be provided on questions regarding commission payments, it is confidential, nevertheless we have an agreements, and it is our investor. There is no doubt, and we have contributed a great amount of work in order to be in the present situation,” emphasizes Krastiņš.

As reported, at the beginning of February “airBaltic” shareholder agreement between the government of Latvia and German investor Ralf-Dieter Montag-Girmes was signed, agency “Leta” was informed by the representatives of “airBaltic”. At the end of March it was stated that the investor had paid 52 million euro as stated in the contract. Overall, 132 million euro will be invested in the airline with an aim to modernize their fleet and to realize “Horizon 2021” business plan.

In accordance with the approved deal by the government, the German investor will become 20% stake holder of the airline, but the residual stake will be held by Latvian state.

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