Sale of Brazilian air carrier Varig subsidiaries delayed until December 19

14 December 2005

Sao Paulo, Brazil, 14 Dec – Portuguese state airline TAP – Transportes Aéreos Portugueses must decide by December 19 if it wishes to meet an offer put forward by Docas Investimentos do Brasil to acquire Varilog and VEM, two subsidiaries of Brazilian air carrier Varig, officials said.

Under the terms of the agreement signed in November by TAP and Varig, the Portuguese air carrier said it planned to buy the two companies for US$50 million, US$32.8 million of which would be financed by the Banco Nacional de Desenvolvimento Económico e Social (BNDES) bank.

If Varig were to receive a higher offer for the companies, TAP would be given first refusal to meet that offer, or on leaving the race, receive compensation to the value of US$12.5 million, the agreement said.

Brazilian group Docas Investmentos proposed Tuesday to buy 25 percent of Varig for US$112 million and pay a further US$111.8 million to buy subsidiaries VEM (maintenance) and VariLog (cargo).

On November 8, Aero-LB, a company owned by TAP, Geocapital, owned by Macau gaming tycoon Stanley Ho, and a Brazilian investment fund, made the offer to buy the two companies.

At the same time TAP offered Varig a 40 million euro loan as one of the conditions outlined in the agreement to buy Varilog and VEM. (macauhub)