German 4K Invest completes acquisition of Slovenia’s Adria Airways

German 4K Invest completes acquisition of Slovenia’s Adria Airways
By bne IntelliNews March 16, 2016

German investment fund 4K Invest has completed its acquisition of Slovenian flag carrier Adria Airways, Slovenian Sovereign Holding (SSH) announced on March 15. The deal was completed after the state sellers - SSH, the Bank Asset Management Company (BAMC) and the government of Slovenia - transferred 6.34mn shares to 4K Invest's subsidiary AA International Aviation Holding.

SSH announced on January 19 in a press release that 4K Invest would recapitalise Adria Airways to the tune of €1mn, as well as the €100,000 purchase price of the shares. An additional capital increase of €3.1mn was supposed to be provided by the Slovenian government. On March 9, SSH said Adria Airways had been injected with €4.1mn in fresh capital.

According to SSH's March 15 press release, on the basis of the share purchase and sale agreement signed on January 18, the government, SSH and BAMC received the proceeds from sale of their shareholdings, thus marking the successful closure of the sale of their 83.01 % Adria Airways equity stake.

4K Invest now holds, including the capital increase from March 8, an equity stake of 96.09 % in Adria Airways.

For the president of the management board of SSH Marko Jazbec, the deal will have a long-term positive effect on the budget and the Slovenian economy, and will positively affect all shareholders of the company.

"We are satisfied that a demanding sale process has come to a successful closure, and prior to its sale, have enabled the company to stabilise its operation and to provide grounds to undergo restructuring with the new buyer and, at the same time, to maintain the Slovenian national air carrier in the future,” Jazbec said.

SSH's March 15 press release adds that a stable operation has been ensured for the company, and its further development under private ownership has been provided for, thus establishing the foundations a long term future for the Slovenian national air carrier.   

Also on March 15, four 4K Invest nominees were appointed to the Adria board, Slovenian Press Agency (STA) reported on March 15.

The appointment of Markus Zollner, Holger Kowarsch, Martin Vorderwulbecke and Steve Roper to the supervisory board was followed immediately by the naming of Arno Schuster to the management board.

Schuster will take over the position of CEO from Adria's current boss Marko Anzur in the coming days, while Anzur will leave the company, STA said.

Schuster told STA on March 15 that Adria Airways is facing a bright future. He expects good result for this year and believes that no major changes in the flight network will be made.

"We look actually quite positively into this year, expecting good results," he said.

Schuster believes that in general, the basic strategy of Adria Airways "seems like a good fit for a regional carrier", and says that at the moment, the new owner does not have any plans yet to make any drastic changes in terms of network.

"We want to grow with our oun existing network and to make it more efficient," he said, adding that 4K Invest will definitely look at the cost base but failing to answer directly a question about possible cuts in staff, which stood at 415 in January, STA reported.

Schuster admitted that he had no experience in aviation, adding that 4K Invest has experts on corporate restructuring and that company employees would provide know-how in aviation.

Adria pilots called off a strike announced for March 18, in an attempt to force the company's management to sign a new collective bargaining agreement.

The decision came after 4K Invest and the trade union struck a new collective bargaining agreement on March 15, STA reported, sourcing the trade union's press release which stated that the new agreement on pay and working conditions provided a good basis for a constructive social dialogue.

Adria Airways recorded net profit of €921,000 and operating profits of €3mn in 2014, after having negative results for several years before then. The carrier expects to return to profit in 2016, after making a loss of around €5mn in 2015.

Launched in 1961 as a charter airline, Adria began operating scheduled flights three years later with the opening of Ljubljana Airport. It currently operates a modern fleet of 10 short- and medium-range aircraft, which run around 170 weekly scheduled flights to around 20 European destinations.

Adria Airways is one of the companies included in Slovenia's privatisation programme launched in 2013, under which the government plans to sell its stakes in 15 companies. Adria Airways’ privatisation is aimed at improving the airline's competitiveness, as well as efforts to grow the country’s economy.

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