The Executive Board of Lufthansa Group has decided to suspend future coupon payments for the hybrid bond issued in 2015 (maturing in 2075) for the duration of the government stabilization measures, which means until the repayment of the drawn silent participations and the sale of the shareholding in Deutsche Lufthansa by the Economic Stabilisation Fund (ESF) in Germany.
The board stated that its decision was based on the view of the EU Commission that such coupon payments constituted a violation of the state aid regulations of the Temporary Framework for state aid to support the economy in view of the outbreak of COVID-19 (EU Temporary Framework) and the conditions of the state aid approval of the stabilization measures in favour of Lufthansa.
In accordance with the terms and conditions of the 2015 hybrid bond, the suspension of the coupon payments does not result in the forfeiture of the entitlement to the coupon payments, notes the airline. The Lufthansa Group said that it intends to make up for the deferred coupon payments as soon as possible once the stabilization by the ESF has been completed.
Lufthansa Group has not issued any other corporate bonds or financial instruments with options to suspend interest or coupon payments.
Meanwhile, the Thiele family, Deutsche Lufthansa’s second-largest shareholder, has sold more than half of its stake – some 33 million of its 60 million shares at a placement price of €9.80 each – following the death of Heinz Hermann Thiele.
The placement price represented about 10% discount to the May 20 closing price of €10.8680.