The Portuguese government, through the state-owned assets oversight board (Direção Geral do Tesouro e Finanças - DGTF), has approved a reduction in the share capital of TAP Air Portugal (TP, Lisbon) by two-thirds from its current EUR980 million euros (USD1.05 billion) to EUR313.6 million (USD337.8 million) to absorb losses and restructure its financial obligations.
The majority state-owned carrier said in a market note that the reduction will be achieved by lowering the nominal value of TAP’s shares from EUR5.00 euros (USD5.39) to EUR1.60 (USD1.72) per share.
Of the EUR666.4 million (USD717.7 million) reduction, EUR323.4 million (USD348.3 million) will be used to cover incurred losses while EUR343 million (USD369.4 million) is designated to absolve the government from its obligation to disburse the last tranche of capital subscribed to in late 2022. In exchange, the government has committed to repay an equivalent amount by December 18, 2024, without incurring additional liabilities.
The adjustments will enable TAP to issue EUR400 million (USD430.8 million) in bonds during the 2024 calendar year which, Finance Minister Joaquim Miranda Sarmento noted, will allow the airline to shift its restructuring goals from 2025 to 2024. The adjustments to the company's equity structure will also ensure financial stability without the state incurring any further liabilities.
Meanwhile, according to the newspaper Eco, Portugal’s sovereign wealth fund (Parpública) has hired Bank of America as the financial advisor for TAP's privatisation, set to take place in 2025, with the final equity to be divested still undecided. IAG International Airlines Group, Air France-KLM, Lufthansa Group, as well as some Middle Eastern funds, are reportedly interested in the airline.
The value of TAP is still being assessed. However, the Portuguese government is looking to recover “a significant part” of the EUR3.2 billion (USD3.4 billion) injected into the company since its nationalisation in 2020, “if not at first, then over a long period,” said the country’s finance minister, Joaquim Miranda Sarmiento during an interview with SIC Notícias.
