TAP and Macau businessman prepare proposal to buy Brazil’s Varig

14 June 2006

Sao Paulo, Brazil, 14 June – Portuguese air carrier TAP and Macau business magnate Stanley Ho are currently preparing a proposal to buy troubled Brazilian airline Varig, according to Brazilian press reports.

According to newspapers, Globo and Folha de Sao Paulo, Air Canada, US investment fund Brooksfield and a group of Brazilian investors are also expected to be part of the consortium.

Air Canada is also part of the Star Alliance, the group of airlines which recently gave Portugal’s Tap the responsibility of accompanying the Varig restructuring process.

On Monday, a Rio de Janeiro court set conditions on the acceptance of the only proposal put forward at last week’s auction by a Varig workers group.

The offer made by this group, to the value of US$443 million, outlines the payment of half the amount in bonds or future profits, which was not deemed acceptable by the Brazilian airline’s creditors.

On Monday, according to the Brazilian press, TAP CEO, Brazilian Fernando Pinto, met with representatives of Alvarez & Marsal, the consulting company accompanying Varig’s restructuring process, in Rio de Janeiro and the proposal will go ahead if the workers’ proposal fails to move ahead.

The Varig auction was almost deserted at the end of last week, with most investors wary of the payment conditions for Varig’s debts, estimated at US$3.5 billion. (macauhub)