TAP has reduced its share capital from €904.3 million to zero, to cover losses, and then increased the share capital to €980 million, through a phased injection of financial aid from the government.
Portugal’s national flag carrier, TAP, has reduced its share capital from €904.3 million to zero, to cover losses, and then increased the share capital to €980 million, through a phased injection of financial aid from the government that was provided for in the company’s restructuring plan, already approved by the European Union authorities.
In a note sent to Portugal’s Securities Markets Commission (CMVM), TAP said that these decisions followed approval by the European Commission in December of last year of the group’s restructuring plan and the granting of state aid for its implementation.
Under the terms of this restructuring, a tranche of the referred aid is to be granted by the end of 2022.
TAP states that it was decided to reduce the share capital from €904.3 million to zero immediately “to cover partial losses” and then carry out an increase from zero to €980 million, with the new shares fully subscribed by the Portuguese state, through the Directorate-General of Treasury and Finance.
This capital increase is being made through three new cash contributions: €294 million now, €343 million on 20 December 2023 and another €343 million on December 20, 2024.
“In order to accommodate these changes to the share capital, it was also decided to amend article 4, paragraph 1 of the Articles of Association,” the airline explains in the note.
As a result of these operations, it adds, TAP’s share capital now stands at €980 million, represented by 196 million shares with a nominal value of €5 each, of which €294 million have been paid up.
“As a result of these operations, TAP maintains the Portuguese Republic as its sole direct shareholder and beneficial owner, through the Directorate-General of Treasury and Finance,” the company said, stressing that “these operations result in a strengthening of TAP’s capital structure.”
The contribution of this €980 million to TAP was provided for in the 2022 state budget and completes the €3.2 billion total injection agreed with Brussels for the recapitalisation of the airline. Under EU rules, TAP cannot receive any more state aid over the next 10 years.