As shareholders in Portugal's former State-owned airline TAP reel from devasating 2015 losses, they unanimously have approved the issuing of a convertible bond for €120 million which is needed to keep the airline solvent.
The loan got the green light from the National Civil Aviation Authority despite the threat of a Chinese company buying partial control of Portugal's former flag carrier.
TAP confirmed today that shareholders Atlantic Gateway and State company Parpública "approved at a General Meeting this morning the issuance by TAP SGPS SA, of €120 million of bonds convertible into shares in the company."
The loan will occur in two phases. Firstly, TAP receives €90 million from David Neeleman’s airline Azul.
The second part is the remaining €30 million which either can come from the State through Parpública, or again from Azul, which now is part-owned by a Chinese airline company.
Parpública has until June 20th to decide whether to risk more taxpayers' money and subscribe to the bond issue.
"The conversion of the bonds into TAP shares and the provision of guarantees under this issue are conditional on the expressed approved of ANAC," read the company statement.
The National Civil Aviation Authority had to approve the bond issue, as it currently must approve any major decisions taken by TAP’s management, remaining uncertain as to who in fact controls Gateway while clearly suspecting the non-EU citizen David Neeleman of pulling the strings and breaking European rules on airline ownership.
The TAP statement made a polite reference to the 'possible entry' of Hainan Airlines (HNA) buying into the bond issue. HNA currently owns 23.7% of Azul, owned by Neeleman and has its eye on TAP as a long term play.
The National Civil Aviation Authority already has clarified that it has not taken a decision on any changes in the TAP shareholder structure and that this topic won’t come up until such time as the bond issue is convertible into shares. It then can address the Chinese angle.
All in all the ever-shifting TAP shareholding structure is as confusing as ever with the State currently controling 39% of the capital, having sold off a chunk to Gateway last October.
New PM António Costa and Atlantic Gateway agreed the State would buy back shares so the taxpayer again owned 50% of TAP, thus completing one of Costa's pre-election promises.
Gateway will hold 45% under the new deal with 5% available to TAP employees at a miserly discount, but more likely these will be bought by Gateway.
The bonds, when redeemed for shares, will again change the power structure within TAP's boardroom.
Meanwhile, as Neeleman's machinations continue, Parpública is coping as best it can with the interminable intervention of politicians in TAP's structure and future. The Chinese want TAP but need Neeleman to manoeuvre himself into a position where he controls TAP and is able to sell it on.
