Brazilian air carrier Varig to hold new auction on July 11

3 July 2006

Rio de Janeiro, Brazil, 03 July – Brazilian airline Varig will be auctioned off again on July 11, a Rio de Janeiro court said.

The 8th Rio de Janeiro Company Court announced that creditors would have until July 10 to hold a meeting and decide whether to approve or turn down a previous offer to acquire Varig.

Varilog, a former Varig subsidiary which is controlled by US and Brazilian investors, has offered US$485 million for 90 percent of Varig, without taking on its debt.

Businessman Lap Chan, a partner in US fund Matlin Pearson, one of Varilog’s owners, met with Judge Luis Roberto Ayoub, who is in charge of the process, in order to present the details of the acquisition proposal.

Consultancy Deloitte, which is dealing with Varig’s bankruptcy process, said it had given its go ahead to the proposal, as had the Rio de Janeiro Public Prosecution Service, which makes it increasingly likely that the airline will be sold.

Friday Varilog made another deposit in Varig’s bank account in order for the air carrier to be able to continue operating until the auction is held.

This was the fifth deposit made by Varilog this week, but if the company were to lose out in the auction the fund would be returned, along with a 10 percent premium. (macauhub)