The Secretary of State for Infrastructure today praised the fact that for the first time this century, a privatization of TAP has aroused the interest of Europe’s three leading airline groups.
“Never in the three privatizations of this century of TAP have the three leading airlines in Europe been interested – and actively interested – in TAP. And, therefore, this makes me comfortable that the next eight months of pain there for Luís [Rodrigues, CEO da TAP] will result in something good here for all of us”, said Hugo Espírito Santo, in Macau.
On November 22, the state-owned company Parpública confirmed that it had received “three declarations of expression of interest” for the privatization of TAP, the submission of applications for which closed at 4:59 pm that day.
The state company responsible for managing the State’s holdings did not indicate in the statement which companies were interested, but the interest of Air France-KLM, Lufthansa and International Airlines Group (IAG) – owner of British Airways and Iberia – had already been formally confirmed.
“TAP has to be with the big guys. TAP has to join a large group with more than five billion in revenue. This is very important. For its future, we have three who came to express interest, that is, it is public, they announced themselves (…) and it is, notable, that it is the first privatization of the three that have been attempted in this century in which we have the three large European groups participating”, reinforced the ruler, in Macau, at the 50th National Congress of the Association Portuguese Travel and Tourism Agencies (APAVT).
Hugo Espírito Santo said that “at the end of eight months” the first decision should be made and that this will probably lead to negotiation and then the presentation of the report.
“I think we should have a first decision in July,” he added.
Once the deadline for submitting expressions of interest has passed, Parpública will analyze the applications until December 12th, and prepare for non-binding proposals in this process, which foresees the sale of up to 44.9% of TAP’s capital, keeping 5% reserved for workers.
In July, the Government estimated that the privatization process of TAP — which also includes Portugália, the TAP Health Care Unit, Cateringpor and SPdH (formerly Groundforce) — would take around a year, although the final schedule depends on regulatory authorizations.
Parpública will prepare a report that describes those interested and assesses whether they meet the requirements defined in the specifications.
These criteria include revenues exceeding 5,000 million euros in at least one of the last three years, proven experience in the aviation sector, financial capacity and suitability.
After this evaluation, successful candidates are invited to submit non-binding proposals within a maximum period of 90 days.
These proposals must detail the purchase price of shares, how to obtain the necessary financial resources, as well as investment plans in strengthening the fleet, maintenance and engineering, investing in sustainable fuels, respecting labor commitments and strategic vision regarding a possible increase in shareholder participation.
After the non-binding proposals phase, Parpública has 30 days to prepare a new report to submit to the Government.
If clarifications are requested from the proponents, the deadline is suspended until the response or the end of the fixed period.
Based on the Parpública report, the Council of Ministers selects the applications considered most appropriate and invites the chosen proponents to submit binding proposals in the third stage of the process, with a maximum period of 90 days.
This stage involves carrying out information and submitting binding proposals within a maximum period of 90 days, counting from the sending of the invitation.
The Council of Ministers may determine in the invitation letter a deadline for submitting binding proposals of less than 90 days.
After presenting the binding proposals, Parpública has 30 days to prepare a final report, a period that can be extended by the Council of Ministers upon a reasoned request.
Based on this document, the best proposal is selected or a negotiation phase can be initiated to present improved and final binding proposals.
Once the selection is complete, the Council of Ministers approves the final drafts of the sales contracts, which must be signed by the buyer within 15 days.
The State then convenes a general assembly of TAP to approve the deliberations necessary to complete the privatization and implement the agreed industrial and strategic plan.
If the 5% tranche allocated to workers is not fully subscribed, the future buyer will have the right of preference.