The German airline Lufthansa has announced to increase its statutory capital by 598 million new shares leading to gross proceeds of approx. EUR 2.14 billion. Lufthansa will use the net proceeds to repay funds received from the German government due to the Covid-19 pandemic. The transaction is a capital increase with subscription rights, i.e. the company’s existing shareholders can also take part and hence avoid dilution of voting rights by further investing in the newly issued shares. 

The subscription price of EUR 3.58 per New Share corresponds to a discount of 39.3% on the TERP (theoretical ex-rights price). The subscription ratio is 1:1. The new shares are to be offered to the Lufthansa’s shareholders during the subscription period, which is expected to commence on September 22, 2021 and end on October 5, 2021. The rights trading is expected to commence on September 22, 2021 and end on September 30, 2021.  

The transaction is fully underwritten by a syndicate of 14 banks. In addition, a number of funds and accounts under the management of BlackRock, Inc. have entered into a sub-underwriting agreement for a total of EUR 300 million and have committed to fully exercise their subscription rights.

Lufthansa will use the net proceeds to repay the Silent Participation I of the Economic Stabilization Fund of the Federal Republic of Germany (ESF) in the amount of EUR 1.5 billion. Additionally, Lufthansa intends to fully repay the Silent Participation II in the amount of EUR 1 billion by the end of 2021 and also intends to cancel the undrawn amounts of the Silent Participation I by the end of 2021. The Governmental ESF, which currently holds 15.94% of the Lufthansa’s share capital, has undertaken to start divesting its equity interest in Lufthansa no earlier than six months after completion of the capital increase, if the ESF subscribes to the capital increase. In this event, the divestment shall be completed no later than 24 months after the closing of the capital increase, provided that Lufthansa repays the Silent Participation I and the Silent Participation II as intended.