BERLIN (Bloomberg) - Deutsche Lufthansa AG plans to raise 2.14 billion euros ($2.5 billion) through a heavily discounted share sale as it strives to repay a German government coronavirus bailout.
The airline group will offer new shares at 3.58 euros apiece, less than half Friday’s closing price of 8.21 euros, and aims to return all of its 9 billion euros in state borrowings by the end of the year, according to a statement Sunday.
The shares rose despite the lowly issue price, which has long been expected by the market. Oil prices declined for a second session, lifting the broader airline industry, while full repayment will free Lufthansa from restrictive conditions attached to the bailout and allow it to avoid punitive interest payments.
Lufthansa won’t complete the sale until Oct. 5, missing Chief Executive Officer Carsten Spohr’s original target of repaying the state before a federal election next Sunday. He said earlier this month the carrier will instead seek to secure a deal with Chancellor Angela Merkel’s government before she leaves office, which may be some time after the vote due to negotiations over the make up of a ruling coalition.
Lufthansa traded 3.4% higher at 8.49 euros as of 10:08 a.m. in Frankfurt. The carrier’s stock has lost more than one-fifth of its value this year amid increasing gloom about the pace of a travel recovery, with vaccination euphoria giving way to a realization that the most profitable intercontinental routes won’t see normal passenger flows this year.