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(Adds share placement results, quote, detail on German state
holding)
By Abhinav Ramnarayan and Alexander Hübner
LONDON/FRANKFURT, Oct 6 (Reuters) - German airline Lufthansa
received strong investor backing for a 2.14 billion
euro ($2.47 billion) rights issue, providing some encouragement
for travel companies looking to weather the after effects of the
COVID-19 crisis.
The company said on Wednesday that its rights issue was
98.36% subscribed by investors, and the remainder was quickly
sold in the open market soon after.
The cash will be used to repay a chunk of the 9 billion euro
($10.4 billion) government bailout it received last year to
stay afloat throughout the COVID pandemic, which resulted in the
Economic Stabilisation Fund (ESF) taking a 15% stake in the
group.
This was cut slightly in the rights issue to 14.09%, the
German state finance agency said on Wednesday.
Sentiment towards the airlines and travel sectors was
boosted in September by the lifting of restrictions on travel
between the United States and Europe in particular.
"There was a relaxation in trans-Atlantic travel the day the
rights issue was announced - we anticipated an eventual lifting
of restrictions but did not expect it to happen on the day,”
said Stephane Gruffat, co-head of equity capital markets for the
EMEA region at Deutsche Bank.
He said this was the right time for the sector to be raising
capital with passenger volumes and the number of flights
increasing and with airlines have reduced their cost bases and
cash flow stabilising.
Lufthansa is one of several airlines and travel companies
that have raised cash or are planning to raise funds to get
through the toughest period for the sector in two decades.
EasyJet recently completed a 1.2 billion pound
($1.63 billion) rights issue, while tourism group TUI
announced on Wednesday it would raise planned 1.1 billion euros
and Air France is believed to be considering its options.
A solid deal for Lufthansa will provide some encouragement
for the others.
BofA Securities, Deutsche Bank, Goldman Sachs and JP Morgan
underwrote and managed the transaction.
($1 = 0.7378 pounds)
($1 = 0.8672 euros)
(Reporting by Abhinav Ramnarayan and Alexander Huebner, editing
by Louise Heavens)
