B6 stake goes up for sale..

[AAviator]

Like the sale of BMI, LH is dropping assets not generating revenue for shareholders.

First BMI, where BA was the buyer, for the benefit of OneWorld.

Now it is its ownership in B6.
http://www.marketwatch.com/story/lufthansa-puts-its-jetblue-stake-on-the-block-2012-03-29

This should be interesting...

 

[JFK Fleet Service]

<cough> IAG <cough>

 

[BoeingBoy]

First BMI, where BA was the buyer, for the benefit of OneWorld.

Now it is its ownership in B6.

Not necessarily. LH is issuing bonds (i.e. borrowing money) that, when due, allow the holder of the bonds to choose to be repaid in either cash or B6 stock. I suspect that there is language defining how much B6 stock the holder of the bonds would get per $1000 worth of bonds. Anyway, until the bonds are redeemed there's no way to know whether the holders will all want cash, B6 equity, or a combination.

Jim

 

[AAviator]

Technically, yes, simply put, you are correct. I stand corrected.

What is happening, is that LH is no longer intent on maintaining its interests in B6. Buyers on the debt have a choice.. Good move on LH's part. More in line of what I meant to say...

 

[BoeingBoy]

Technically, yes, simply put, you are correct. I stand corrected.

What is happening, is that LH is no longer intent on maintaining its interests in B6.

LH could have just sold it's B6 stake if they wanted out.

Jim

 

[FWAAA]

Generally, in this country, airlines sell convertible debt as one of the last-gasp desperate measures to raise money when things start looking bleak and the airline really needs to raise cash. Maybe things are different in Germany.

What's really unusual about this situation (to me at least) is convertible debt where the notes are convertible into stock not of the issuer of the debt, but stock in a different company in which the borrower holds a minority stake. That's odd.

Essentially (very oversimplified, of course), what LH did was take their B6 stock to the pawnshop, borrowed money against it and may decide not to redeem the collateral, instead allowing the pawnbroker to keep the B6 stock. And I don't see that happening all that often when companies want to unload a 15% stake in a different company.

 

[eolesen]

LH issued a statement earlier essentially saying what has been said above -- they are not planning to sell off their holdings, but just changing the structure.

 

[Kellerguy]

LH issued a statement earlier essentially saying what has been said above -- they are not planning to sell off their holdings, but just changing the structure.

By placing the optional stock redemption, that adds additional upside without any additional risk to the lender, meaning they were most likely able to provide a lower bond interest rate.

 

[KILOFINAL]

LH is doing the right thing by liquidating assets. Look at KLM/AF as an example to see the pressure being felt by the larger euro carriers as financials tighten up. The troubles with the european ETS scheme arent helping matters either.

The petro carriers are having the last laugh currently and even LH"s cargo business is taking a hit as the MD11's are being blocked from landing rights into certain locations.

Like the sale of BMI, LH is dropping assets not generating revenue for shareholders.

First BMI, where BA was the buyer, for the benefit of OneWorld.

Now it is its ownership in B6.
http://www.marketwatch.com/story/lufthansa-puts-its-jetblue-stake-on-the-block-2012-03-29

This should be interesting...