(Adds comments from ministry official in fifth paragraph.)
Dec. 1 (Bloomberg) -- Latvia’s government bought out a minority shareholder in unprofitable AirBaltic AS, acquiring a stake that was pledged as collateral in Latvijas Krajbanka AS, the lender that was suspended on Nov. 21.
The state bought the shares for 224,453 lati ($432,972), giving it 99.8 percent in the carrier, the Transport Ministry said in a statement. The goal of the acquisition is to protect the depositors of Krajbanka, who are receiving payouts from the deposit insurance fund, the ministry said.
The government reached an agreement with Baltic Aviation Systems, the minority owner, to invest a combined 107 million lati in AirBaltic after the airline posted a loss last year and continued to lose money this year. The minority shareholder’s financial problems threatened to prevent the state from investing in the airline’s capital, the ministry said.
“The government decided to act proactively in the defense of the state’s interests and take control of AirBaltic,” the statement said.
The state and the minority shareholder had invested together about 30 million lati in the company in October and planned to invest another 70 million lati to 79 million lati more, said Anrijs Matiss, the Transport Ministry’s state secretary, according to the Baltic News Service.
Should BAS decide to invest the money by Dec. 22 it could get its stake back, said Matiss, according to BNS.
“It’s obvious that that 200,000 lati for 47.2 percent of AirBaltic’s shares is an inadequately low sum, and in this situation the government and also Krajbanka’s administrator has acted against the interest of the airline and the bank’s depositors,” said Bertolt Flick, a shareholder in BAS and the former chief executive officer of the airline, in a statement posted on Leta.lv’s website.
The decision to take control of AirBaltic won’t significantly affect the 2012 budget, the ministry said.
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