TAP in Groundforce €6.97 million capital raise

Portugal’s national carrier TAP has advanced with a capital raise of nearly €7 million for the baggage handling company Groundforce.

The decision was taken over the weekend to increase the capital of SPdH – Serviços Portugueses de Handling which controls Groundforce, to the value of €6.97 million in order to “avoid a situation of imminent insolvency,”
According to a letter that Jornal Económico has seen, TAP’s solution to break a deadlock at Groundforce was to increase capital at the baggage handling company through a subscription of 697,000 new ordinary shares which will be issued with a nominal value of €10 each.
“The TAP group therefore proposes an increase in capital from €500,000 to €7.47 million “to be fully subscribed by a company of the TAP Group,” states the letter sent on Sunday to the private and majority shareholder, Alfredo Casimiro.
If SPdH signs the proposal, it expressly recognises before TAP that “at the present date it is in debt to TAP to the amount of €7.915 million”.
Alfredo Casimiro, a self-made man who grew up in a children’s home coming from a humble background, started his business life as a child selling vegetables grown on a family allotment in the market from the age of five in what then was the Lisbon suburb of Odivelas.
Casimiro went on to start the successful removals and haulage company Urbanos in 1990 and later became a shareholder in Groundforce in 2012 via Pasogal (50.1% share). The entrepreneur also tried to compete, but failed, in the privatisation of the mail service company CTT.
But by 2016 the company had significant financial problems with around 19% of its debt estimated at €44 million owed to State entities, namely companies holding the remaining assets and NPLs of bak BPN and also Caixa Geral de Depósitos. The main creditor at that time was Novo Banco.
Regarding the baggage handling company, the pandemic and the resulting drastic reduction in air traffic put Groundforce in difficulties. In his negotiations with the government for a €30 million loan to save the company, which required that the company’s shares should be put up as a guarantee, Alfredo Casimiro failed to mention that the shares has already been “pawned” as security to a bank.
The revelation of a recording of a private conversation between him and the minister of infrastructure, Pedro Nuno Santos, has now resulted in the minister lodging a legal suit against Casimiro.
The private conversation, recorded without the minister’s knowledge or consent, and which became public, involved the private Groundforce shareholder quizzing the minister on if the private TAP shareholder, Humberto Pedrosa, was injecting money in the same proportion into the airline company as the Portuguese State.
In his reply, Pedro Nuno Santos stated what the Government had already said; that Brussels, within the scope of TAPs restructuring, would demand the conversion of part or all of the total capital.
“What will happen is that Humberto Pedrosa’s share will turn to dust,” he was reported as saying.
“I’m not sure if it (the share) will end up 1%, we’ll see. They won’t be able to keep up and will be diluted to a residual shareholding,” the minister is reported to have said in the recording.