By Joshua Kirby
Deutsche Lufthansa AG is launching a capital increase worth 2.14 billion euros ($2.51 billion) as the German airline looks to strengthen its equity position.
Starting Wednesday and running until Oct. 5, just under 6 million new shares will be offered to shareholders, doubling the current number, at a subscription price of EUR3.58 for each new share. Lufthansa shares closed Friday at EUR8.21.
The gross proceeds will be used to repay EUR1.5 billion of Lufthansa's participation in Germany's Economic Stabilization Fund, the company said. A further EUR1 billion will be repaid by the end of the year, Lufthansa added.
The ESF was set up by the German government last year to help companies weather the coronavirus pandemic. The fund bought a 20% stake in Lufthansa for some EUR300 million, but has since sold part of it stake, citing the success of the airline's measures taken to face the crisis. If the ESF participates in the capital increase, it has undertaken not to divest its shares before six months from completion, and to have fully divested no later than 24 months after that point, Lufthansa said.
A number of funds and accounts under the management of investor Blackrock Inc. have agreed to exercise all subscription rights and have entered a sub-underwriting agreement for a total of EUR300 million, the airline said. All members of the Lufthansa executive board have also agreed to participate in the capital raise.
Write to Joshua Kirby at email@example.com; @joshualeokirby
(END) Dow Jones Newswires
September 20, 2021 01:36 ET (05:36 GMT)Copyright (c) 2021 Dow Jones & Company, Inc.