Following successful negotiations, on behalf of the Republic of Slovenia and on their own behalf, Slovenian Sovereign Holding, together with Bad Asset Management Company, signed a Share Purchase and Sale Agreement for 91.58 % shareholding in Adria Airways.
The Contract includes a capital increase by the Republic of Slovenia in the amount of EUR 3.1 million and a capital increase by the buyer, 4K Invest, in the amount of EUR 1 million, and a purchase price for SSH, RS and BAMC in the amount of EUR 100,000.00 EUR. 4K Invest, one of the leading turnaround specialist in Europe, in addition to the paying-up of capital, will provide for the viability and the development of the Slovenian national airliner, and enable other long-term positive impacts.
The entire sale process started in July 2015 when contact was established with a wide range of financial and strategic investors. The sale process was managed on behalf of both Sellers by Slovenian Sovereign Holding, together with financial and legal advisors, and was conducted as a competitive sale process. The sale process was conducted in a professional and transparent manner providing equal treatment to all investors participating in the sale process, in accordance with the international practice in this field.
On the basis of a competitive sale process, the investment fund, 4K Invest (through 4K KNDNS GmbH), headquartered in Luxembourg, offered the best bid, and was selected as the final buyer. The buyer, 4K Invest will recapitalise Adria Airways in the amount of EUR 1 million.
The Republic of Slovenia will provide for the capital increase in Adria Airways in the amount of EUR 3.1 million. This is lower as the estimated and assessed direct costs linked with a bankruptcy scenario. Having compared the stress scenarios, a decision was passed that the sale of Adria Airways with a prior recapitalisation by the Republic of Slovenia and a private investor, is the most cost-effective solution for the Republic of Slovenia, representing lesser cost for the Republic of Slovenia than a theoretical bankruptcy.
In addition to that the functioning company contributes to the Slovenian budget approximately EUR 10 million annually through taxes while, under a negative scenario, the high costs of unemployment benefits would be directly charged to the Slovenia budget.
At the General Meeting of Shareholders of Adria Airways on January 19th 2016, this transaction was put into execution.
It is assessed by SSH and BAMC, that Adria Airways will get a buyer who will restructure it, maintain the Slovenian airline and provide for its future development, enabling thus long-term positive impacts to the budget, the Slovenian economy, the development of the industry and of all the stakeholders of the Company.
The capital increase and the sale process are expected to be completed in the following few months since regulatory approvals must first be obtained by the buyer and other contractual suspensive condition must be met.
In accordance with the Decision of the National Assembly of RS of 21 June 2013, Adria Airways was included on the list of companies listed for sale. In accordance with the State Assets Management Strategy of 13 July 2015, Adria Airways was defined as portfolio asset. In the past, the process for the sale of Adria Airways shares was conducted by AUKN which, however, in 2013 failed to close successfully as offers received were considered unacceptable; the Company has been struggling with business and financial problems for quite some time.
The sale process was led and coordinated by Slovenian Sovereign Holding and BAMC in cooperation with the financial advisor, KPMG, and legal advisors, Karanović & Nikolič.
Investment fund 4K Invest will enable Adria Airways to grow again and develop
4K Invest is a highly specialized fund that actively supports its companies in their return to profitability and independence from their former ownership. With more than 20 years of experience and nearly 200 successful turnaround transactions of the management and partner team, 4K Invest is the among the leading turnaround specialists in Europe.
According to the buyer, the new strategy of Adria Airways will be: stay focused on serving the Slovenian, Albanian, Kosovo and Macedonian market; fly modern aircraft, connect to the world via Star Alliance network. Adria airways will continue to be a „hybrid“ airline: scheduled service that attract business customers and offer favourable prices for tourists. The airline is expected to add more modern aircraft in order to grow its international network, according to the buyer. Adria Airways will continue to service its new market in Estonia.