Deutsche Lufthansa is raising €2.1bn ($2.5bn) from a capital increase in a bid to strengthen its balance sheet and to enable the early repayment of the state-led stabilization package issued last year during the peak of the pandemic. The company expects to raise €2.14bn ($2.5bn) through the new issue with a subscription price of €3.58 per share corresponding to a discount of 39.3% to the TERP (theoretical ex-rights price). Additionally, some funds under BlackRock have entered into a sub-underwriting agreement to fully exercise their subscription rights for €300mn ($351mn). The company said, “The net proceeds from the Capital Increase will be used to strengthen the Group’s equity base and to repay the Silent Participation I.” The group expects to improve its net debt position and reduce its leverage ratio to less than 3.5x. It also targets an investment grade rating in the medium term (current rating is Ba2/BB-). The group’s liquidity based on the balance sheets as of June 30, 2021 will be within €6bn to €8bn ($7bn to $9.4bn) when taking into account the repayment of Silent Participations I and II. Remco Steenbergen, CFO of Deutsche Lufthansa AG said, “We are confident that this capital increase will facilitate the delivery of our mid-term balance sheet targets, supported by our strong Adjusted free cash flow generation and precipitate value-accretive capital returns going forward.
Lufthansa’s 2% 2024s and 4.382% 2075s were up 0.02 and 0.24 to trade at 101.83 and 98.63 respectively.