COLOGNE (dpa-AFX) - The German government has approved a 9 billion euros rescue package for Deutsche Lufthansa AG (DLAKF, DLAKY), which is the largest German corporate rescue package since the coronavirus crisis struck. The airline has also agreed to the rescue deal.
The German government will take a 20% stake in the airline, which it plans to sell by the end of 2023.
The rescue package still requires approval of the European Commission, as well as the Management Board and the Supervisory Board of the company.
As part of the rescue package, the government will also inject 5.7 billion euros in non-voting capital, which is known as a 'silent participation'. Part of the funds could be converted into an additional 5% equity stake, either if non-payment by the company or to protect the company against any potential hostile takeover bids.
Lufthansa will also receive a syndicated credit facility of up to 3 billion euros from state-backed bank KfW and private banks with a term of three years.
Germany will buy the new shares of Deutsche Lufthansa at the nominal value of 2.56 euros per share for about 300 million euros.
Lufthansa said that conditions of the deal include the waiver of future dividend payments and restrictions on management remuneration. The German government will also fill two seats on its supervisory board, one of which is to become a member of the audit committee.
Lufthansa had grounded 700 aircraft or nearly 90 percent of its total capacity in March due to the outbreak of the COVID-19. It expects to resume operations in June.
Copyright RTT News/dpa-AFX
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