Neeleman agrees to leave TAP, but final agreement depends on remaining Azul shareholders

David Neeleman agrees to leave the capital of TAP for an amount between 45 and 55 million euros. But Brazilian company Azul will have to cede the right to convert the 90 million euro bond loan it made to the Portuguese company into capital. Final agreement depends on shareholders of Azul who have yet to assess the condition imposed by the State and “need more time” for a decision, according to a source close to the process.

Rafael Marchante / Reuters

The State does not abdicate that Azul, a company that is TAP's bondholder, renounces the right to convert the 90 million loan, made in 2016, into capital. This is the condition that remains to be fulfilled to avoid nationalization and guarantee a final agreement the withdrawal of private shareholder David Neeleman from the capital of the national carrier, which has already agreed to leave TAP for an amount between 45 million and 55 million euros. But a condition imposed by the State will have to pass through the sieve of Blue shareholders who may need more time for the decision, Jornal Económico knows from a source close to the process.

“The problem at the moment is Azul, whose shareholders are not only David Neeleman, who until recently reduced his position in this company. The shareholders have a say in the condition imposed by the State. They are the ones who decide. Hopefully, common sense prevails, ”said the same source, saying that Azul“ may need more time to gather shareholders and make a decision ”.

The JE knows that the solution to get TAP emergency aid of 1200 million euros without a nationalization could go through a capital reconfiguration in which the State is the majority (72,5%) and Humberto Pedrosa remains as a minority (22,5 , 5%), the remaining XNUMX% remaining in the hands of TAP workers.

The negotiations between the State and David Neeleman, one of the owners of Atlantic Gateway, a company that owns 45% of TAP's capital (whose position of 22,5% would add to the 50% that the State holds in the company, and the same position would be with Humberto Pedrosa), are still going on, after the negotiation marathon launched in the last two days, with a view to an understanding. Despite news reports that these will have failed, JE knows that there is still the possibility of an agreement if Azul's shareholders accept the Executive's conditions for the 1.200 million euros loan.

But the Azul loan is an obstacle to the final agreement, as the Brazilian company Azul will have to cede the right to convert into equity the 90 million euro bond loan it made to the Portuguese company in 2016. A decision that requires the shareholders' agreement Azul that may not want to give up the right to convert that debt into TAP's capital, in a loan that provides interest of 7,5%, until its maturity in 2026.

This is the obstacle that remains to avoid the most drastic solution of nationalization, whose diploma will be ready for approval by the Council of Ministers.

It should be recalled that David Neeleman is a shareholder and chairman of the board of directors of Azul, which was one of the vehicles he used to make the investment in TAP. Sources close to the process warn, however, that the Brazilian company has other shareholders and that Azul is a company listed on the São Paulo and New York stock exchanges, so the State's requirement “must be decided by its shareholders and not just by David Neeleman ”, who, by the way, remember, in April he sold part of his preferred shares in this airline, at a time when the sector has been strongly shaken by the covid-19 pandemic.

That is, the final agreement depends not only on the Neeleman agreement, but on what the shareholders of Azul, which is TAP's bondholder, decide.

Humberto Pedrosa could take Neeleman's position in a second phase

According to JE, Humberto Pedrosa will be part of the solution for TAP, without the shareholder Neeleman. If the drastic nationalization solution is removed, the State will be able to strengthen its position, taking 72,5% of TAP and Atlantic Gateway with 22,5%, in a position that the Portuguese businessman who owns Barraqueiro may, in a second phase, increase with the participation (total or partial) that the State now intends to buy from David Neeleman.

António Costa said he expected a solution for TAP during this Wednesday, July 1st

“I am sure that, if not today, at the limit, in the next few days, we will have a final solution. But, if I had to bet, I would say that today will be the day of the solution for TAP, and I hope it will be negotiated and in agreement with our private partners, and not exactly with an act of imposition by the State ”, declared the Prime Minister , adding: “If necessary, we will be here for that. I hope it is not necessary ”.

According to the prime minister, "TAP is surely on the way to having a stable solution that ensures Portugal maintains its company", which he considered fundamental for the country's territorial continuity and economic development and its connection to the world.

António Costa spoke in joint statements to journalists with the President of the Spanish Government, Pedro Sánchez, in Castelo de Elvas, in the district of Portalegre, after the official ceremonies that marked the reopening of the border between Portugal and Spain.

Asked if the Government wants businessman David Neeleman to leave TAP, António Costa did not answer the question and limited himself to mentioning that he had no “opportunity in the last hours to have information” on this matter.

"But I believe that the problem, the issue will be overcome very quickly", he reiterated.

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