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TAP – State Control Proposal Accepted

The Portuguese Competition Authority (AdC) has given the State the green light in strengthening their stake in TAP through the acquisition of 22.5% of the company’s capital, in addition to the 50% already held by Parpública _ Participacoes Publicas.

The AdC Council decided not to oppose the Portuguese Republic / TAP SGPS merger, in response to notification by the Directorate-General for Treasury and Finance (DGTF) of the acquisition of exclusive control over the airline, in addition to the participation held by Parpública.  In a statement, the AdC said, “in accordance with the competence conferred on them … they decided to adopt a decision not to oppose the merger, since it is not liable to create significant barriers to effective competition in the relevant identified markets.”

On the 2nd of July, the Government announced that it had reached an agreement with TAP’s private shareholders, to hold 72.5% of the capital of the Portuguese airline.

In early August, shareholders of the Brazilian airline Azul, led by David Neeleman, approved, at a general meeting, the TAP exit agreement, including the elimination of the rights to convert the obligations pertaining to Azul’s 2016 90 million euros loan to TAP into shares and the sale of the position of Global AzurAir Projects by TAP.

In addition, the 946 million euro European Union (EU) interest-bearing loan in favour of the TAP Group, to which they can add 254 million, without the State being bound by this provision, involved the acquisition by the Portuguese State of social participation, economic rights and a part of the ancillary payments of the current shareholder of TAP SGPS, Atlantic Gateway, SGPS, Lda.

In this way, the Portuguese State has a total social participation of 72.5%, with the remaining capital held by businessman Humberto Pedrosa (22.5%) and airline workers (5%).

The TAP Group recorded a loss of 606 million euros in the first half of 2020, of which 582 million refer exclusively to aviation (TAP SA).

Samantha Gannon

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