BERLIN (Reuters) – German airline Lufthansa warned on Tuesday that it might need to apply for creditor protection if its state-backed bailout failed to win sufficient shareholder support in a vote later this month.
Its statement came after German investor Heinz Hermann Thiele sharply criticised the 9 billion euro ($10.1 billion)bailout deal, saying he had raised his stake in the company to more than 15% and hoped alternative options could be explored.
Lufthansa said its executive board expected the attendance at its extraordinary general meeting to vote on the package on June 25 to be below 50%, which would mean two-thirds of those present would need to vote in favour.
“In view of the latest public statements by the company’s largest single shareholder, Heinz Hermann Thiele, the board considers it possible that the stabilisation package could fail to achieve the two-thirds majority of votes cast that would be required in this case,” Lufthansa said.
“This would mean that Deutsche Lufthansa AG would possibly have to apply for protective shield proceedings under insolvency law a few days after the annual general meeting if no other solution is found immediately,” the German airline said.
Under German protective shield proceedings, a company’s management remains in charge and typically gets up to three months to come up with a plan to avoid insolvency.
Lufthansa shareholders must register to attend the shareholder meeting by June 20 and if more than 50% attend, a simple majority would suffice, Lufthansa said.
In an interview with the Frankfurter Allgemeine Zeitung newspaper, Thiele said he was not satisfied with the deal that gives the German government a 20% stake in Lufthansa, as well as two seats on its supervisory board.
Thiele, who declined to say whether he would vote against the deal, said an indirect state participation via German state-owned development bank KfW could be an alternative to an outright government stake.
With many of its planes grounded because of the coronavirus pandemic, Lufthansa said on Monday it was seeking to strike agreements with worker representatives by June 22 on how to make job cuts equivalent to 22,000 full-time positions.($1 = 0.8877 euros)
(Reporting by Michelle Martin in Berline and Ilona Wissenbach in Frankfurth; Editing by Keith Weir and David Clarke)