Chile's President-elect Sebastian Pinera approved Friday the sale of his majority stake in flagship airline LAN, worth an estimated USD$1.5 billion.
Pinera approved the sale via a shareholder meeting of his main holding company Axxion, which must now set the price of the sale of his 26.3 percent stake in LAN, one of Latin America's biggest airlines.
The conservative billionaire had vowed to sell his stake in LAN, which is held by his holding companies Axxion and Santa Cecilia, before taking office on March 11. He won last month's presidential run-off, ending 20 years of centre-left rule.
The Cueto family, which has the first option to purchase the stake, separately approved a USD$1 billion capital increase aimed at buying into Pinera's LAN stake, and now has 20 days to decide how much of it they will buy.
"The board of Axxion is authorized to set the sale price of the LAN shares and set in motion the sale plan contemplated in the shareholder pact with the Cueto family," Axxion said in a statement.
PUBLIC OFFERING?
Brazil's largest airline, TAM, last week declined comment on a media report that it was in talks to buy into Pinera's stake in LAN. TAM has an operational partnership with LAN via codeshare and helps maintain the company's aircraft.
"TAM was the favorite, but we talked to them and they said no," said an analyst close to the negotiations.
"I would bet money the public will get the rest (of Pinera's LAN stake)," he added, referring to a public offering.
Axxion has said Pinera will place the funds raised from the stake sale in a blind trust, under which a third party manages investments without any involvement or influence of the investor.
Pinera has already placed hundreds of millions of dollars worth of investments in a blind trust, seeking to counter critics who said his business empire poses conflicts of interest with the role of president.
Axxion holds a 19.03 percent stake in LAN, with another Pinera holding company, Santa Cecilia, owning an additional 7.3 percent. The two holding companies would coordinate the sale of their combined stakes, Axxion added.
The Cueto family, which holds the second-biggest investment in LAN, at 25.5 percent, via its Costa Verde Aeronautica holding company, is expected to take a significant slice of the stake and possibly even all of it.
Costa Verde Aeronautica said it would issue 500 million shares worth USD$2 each to fund the capital increase. The company did not say how much of Pinera's stake the Cueto family would buy, but local media have reported that the family has been seeking additional financing.
