MOSCOW (Reuters) – The Russian government intends to use funds from the National Wealth Fund (NWF) to buy back Aeroflot's additional share issue (MCX: AFLT), Finance Minister Anton Siluanov told reporters on Wednesday.
Aeroflot's board of directors and shareholders have approved an additional issue of up to 1.7 billion shares to be placed by public subscription, but the volume and price of the offering have not yet been determined.
“We plan to see how the market will react to the additional issue, how willing investors will be to participate in this additional issue, and, accordingly, we will also place the required volume of our resource. It is planned to use the funds of the NWF for this,” he said.
The volume of the NWF, taking into account the funds placed in bonds, shares and on deposits in banks, by the beginning of autumn amounted to 13.26 trillion rubles, or 11.7% of GDP, in August the Ministry of Finance spent 3.56 billion rubles from it to finance the budget deficit.
Earlier, sources told Reuters that the government was preparing a plan to bail out Aeroflot through a significant buyback of its new shares. The airline plans to hold an SPO, selling shares to both its main shareholder and retail investors, the sources said. It was assumed that the airline will sell shares worth 80 billion rubles, with about 50 billion rubles to be invested by the state, and the remaining 30 billion – by the Russian Direct Investment Fund (RDIF) and VTB (MCX: VTBR) in equal shares.
Aeroflot, like most airlines in the world, has greatly reduced passenger traffic during the coronavirus quarantine and is suffering losses. In the second quarter, the airline received a net loss of 35.8 billion rubles with a decline in revenue by 85% to 25.5 billion rubles.
(Daria Korsunskaya. Text by Gleb Stolyarov. Editor Maxim Rodionov)