Eleven companies, including Portugal’s TAP, pick up Varig’s tender document

1 June 2006

Rio de Janeiro, Brazil, 01 June – eleven companies including Portugal’s TAP, have picked up the tender document for the auction of Brazilian airline Varig, which is due to take place Monday, Varig said Thursday.

Amongst the other companies to pick up the document, are Brazilian market leaders, TAM e Gol, as well as Ocean Air and BRA.

Varig’s auction , which had initially been set for July, was brought forward due to a decision by a Rio De Janeiro court responsible for the company’s recovery process.

The future owner of Varig will not be responsible for the labor and tax debts of the airline, which are currently estimated at US$3 billion.

The company that wins the auction will have to make a payment of US$75 million up to three days after the auction, in order for its proposal to be analyzed by teh Rio de Janeiro Court.

The proposal must also be analyzed by Brazilian aviation regulator, Agência Nacional de Aviação Civil (ANAC), within a maximum of 60 days, according to the rules set out for the auction.

If the winning company is not approved the process will continue by analyzing the second-best proposal.

At the beginning of May, an assembly of Varig’s creditors approved the sale by auction for a minimum price of US$800 million.

If this figure is not reached, interested parties may present proposals for acquiring Varig’s domestic operations, for a minimum price of US$700 million.

Foreign companies may also take part in consortia competing in the auction, provided they have a maximum 20 percent stake, according to Brazilian legislation. (macauhub)