TAP: Government opts for direct sale

Portugal’s government is to opt for a direct sale of more than 50% of the national airline TAP.

The direct sale model was in a decree-law that will be approved by the Council of Ministers at its next meeting on Thursday.
A public competition, a stock market float (as was the case with the postal service CTT in 2013), public subscription, a competition open to especially qualified candidates, or direct sale are all options that the government has at its disposal to sell off all or part of the nationalised airline.
But in this case, the government is to sell direct in an option that was different for the sale of SATA International (serving the Azores) in which the Regional Government of the Azores chose to launch an international public competition whose winner will be published in the coming weeks.
On Tuesday, the Prime Minister, António Costa announced that the government would approve a decree-law for the reprivatisation of the airline at next week’s Council of Minister’s meeting.
António Costa has admitted to selling all of part of the company “taking into account Portugal’s interests”.
Off the record, government insiders are pointing to a 70-80% selloff, although it could be 100%.
The government will prepare a dossier with information about the company to be sent to credible interested parties.
During the binding proposal phase a data room will be created that will enable interested parties to have access to extensive information about TAP providing a confidentiality agreement is signed.
This would be followed by a period of due diligence when an interested party would go through the company’s books with a fine tooth comb.
The conditions of the contract and a labour conditions accord outlining the buyer’s obligations, such as maintaining Lisbon as a hub would also be made clear.
Once binding offers are received, the government will evaluate each offer and candidate and could even create a ‘Best and Final Offers’ phase before the winner is approved via a Council of Ministers Resolution followed by an exchange of contracts conditioned by the necessary regulatory authorisations.
The reprivatisation so far has three definite interested parties in Europe: Lufthansa, IAG and Air France – KLM. There is also a Portuguese consortium led by entrepreneur Diogo Lacerda Machado and could include river cruise and media magnate Mário Ferreira. The Colombian tycoon German Efromovich, who already tried to buy the airline twice in the past, could throw his hat in the ring for a third time. Last week it transpired that certain MPs in Brazil’s parliament thought that Brazilian entrepreneurs should make a bid because of TAP’s extensive air links to the country.