Lufthansa seeks shareholder approval to raise $2.6 billion

Bloomberg

Deutsche Lufthansa AG is seeking shareholder approval to raise up to 2.4 billion euros ($2.6 billion), funds that could lower but not be enough to avoid the need for a government orchestrated bailout the carrier is facing to get through the coronavirus crisis.
Germany’s flagship airline is seeking to issue 176 million new shares, or 36% of its existing capital, it said in an invite to the annual general meeting on May 5. That offer, which includes subscription rights, would be valued at about 1.5 billion euros at current market prices.
The company is also seeking permission to raise about 420 million in convertible bonds, based on current prices, and a similar amount of equity in a separate capital hike of 10%.
Issuing the securities would give Lufthansa some flexibility as it contends with a liquidity crunch that’s hit all airlines worldwide. Yet the fundraising measures would come amid a market rout that’s unsettling investors, potentially leading to lower prices and smaller amounts raised.
A spokesman for Lufthansa said the move was routine and could have happened regardless of the coronavirus crisis. Lufthansa sought a similar amount last year, he said.
Lufthansa, which has grounded almost all of its fleet and retired more than 40 planes, is also discussing options for state aid with the governments of Germany, Austria and Switzerland. Pressure is building for the carrier to accept partial ownership by Germany as a component of state support. The convertible bond issue would translate into 47.8 million fresh shares, or proceeds of about 420 million euros at the current price.