Aegean Airlines contemplates buying back Greek gov’t warrants

AEGEAN Airlines

Aegean Airlines has announced that the Greek government notified it of its intention to exercise the rights granted by all of the warrants it holds for the company’s shares, which it received in 2021 as part of the flag carrier’s Covid bailout.

Aegean said in a statement released on Monday, November 6 that Athens had told it of its intention on November 3.

The European Commission approved in December 2020 a Greek state grant of EUR120 million euros (then USD146 million) to the privately owned airline, aimed at compensating part of the losses caused by the pandemic that year.

Two prerequisites for the disbursement were later added - that the private shareholders must participate in a share capital increase to raise at least EUR60 million (USD73 million at the time), which was duly completed in June 2021, and the obligation for the company to issue without consideration warrants to the state, giving the right to buy the company’s shares at a price equal to that of the capital raise. The shareholders approved these conditions in March 2021.

The share capital increase took place at a price of EUR3.20 (USD3.42) per share, giving the exercise price of the warrants the same price, with the exercise period beginning on July 2, 2023, and ending on July 3, 2026. Each of the 10,369,217 warrants gives the right to buy one new common registered share.

If the exercise is completed, the Greek state will acquire new shares representing 10.3% of the company’s share capital by paying EUR33.2 million (USD35.5 million), diluting the stakes of the existing private shareholders.

Aegean Airlines has the right to respond within 60 days from the date of receipt of the notice on whether it is willing to exercise the right to buy back the warrants from the state by paying the difference of their current value, which is around EUR11.43 (USD12.23) per share, meaning it would need to pay EUR8.23 (USD8.80) per warrant, or EUR85.4 million (USD91.3 million) for all of the warrants. The airline said the shareholders plan to discuss the issue soon.

In a separate statement, the president of Aegean, Eftychis Vassilakis, said he favoured buying back these rights.

“We have repeatedly stated that Aegean has both the liquidity and the funds to buy back the warrants. My proposal to the board of directors and to the general meeting of shareholders, which will take the final decision, will be for the company to proceed with the buyback of the warrants from the Hellenic Republic by paying the amount of EUR85.4 million,” he said.

“To this end, the last part of this painful pandemic cycle is concluded, from which the company emerges stronger in all aspects following the contribution of its shareholders, employees, and passengers [...]. We want to thank the state for supporting Aegean in this unprecedented circumstance, and we remain committed to growth, higher added value investments, and contribution to the economy, as well as the country’s capabilities and infrastructure.”

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