The government approved the terms of the privatization of TAP last week during a Council of Ministers meeting. The process will unfold in four stages.
According to a communication released by the government, the stages are as follows:
- Pre-qualification, lasting up to 60 days;
- Non-binding proposals, with a deadline of up to 90 days;
- Binding proposals, also with a deadline of up to 90 days;
- Eventual negotiation.
A resolution defining the terms and conditions for the reprivatization of TAP – Transportes Aéreos Portugueses, S.A., through the approval of the terms, was also approved.
The decree-law for TAP’s privatization, published in August, allows a private investor to acquire more than 44.9% of the company, purchasing what workers do not buy of the 5% reserved for them.
As previously announced by the government, this reprivatization may reach 49.9% of TAP’s share capital through a direct sale of up to 44.9% of the company’s share capital to the main investor and an allocation of up to 5% of the share capital to group employees.
The terms of the privatization require that only airline operators with revenues exceeding 5 billion euros will be considered for qualification in the four-stage process.
The decree-law states, “This allows for the protection of significant public interests in the present and optimizes the valuation potential of TAP in the future for any eventual divestment of the remaining state-held stake, which would include a premium for exclusive control.”
The selection criteria for interested parties include submitting an industrial plan and a strategic project respecting the reprivatization objectives, such as the location of TAP’s headquarters and main establishment, ensuring strategic routes.
A key selection criterion for progressing in the direct sale process includes commitments to labor matters, specifically adhering to legal and constitutional obligations regarding TAP workers’ rights and all existing collective labor regulation instruments.
Regarding future rights, the Council of Ministers may determine preference and/or initial offer rights for the main investor on future state-held TAP share disposals, as well as joint sale rights for the main investor on future state-held TAP share sales, and preference and/or initial offer rights for the state on future TAP shares held by the main investor.
The sale may be structured in one or more stages, possibly including phases to confirm the compliance of interested parties with requirements, submission of non-binding acquisition proposals, binding proposals, and negotiation.
Until the physical settlement of share purchases and sales, the Council of Ministers can suspend or terminate the reprivatization process at any time for public interest reasons without any compensation or indemnity to any interested parties or proposers.
