Cargo company makes bid for Varig
Varig Logistica (VarigLog), the largest air cargo company in Brazil and a one-time subsidiary of the airline Varig, has presented a second, improved bid for the airline in a Brazilian bankruptcy court.
Varig was long the flagship airline in Brazil, but filed for bankruptcy protection in June 2005. The court in early June approved an offer from an employees group to acquire the company, which is operating on a limited scale with reduced flights, but that bid was annulled by the court June 23 after the group failed to make a $75 million down payment.
According to newswire reports, VarigLog's latest offer would make provide creditors with more cash than the company's initial offer, and would be structured to improve revenue prospects for the new unit that would assume Varig's $3.2 billion in debt.
The court will allow Varig creditors to make a decision on the offer after a July 17 creditors meeting. If the offer is rejected, the company would be liquidated.
The court said an initial offer from VarigLog presented last week would have left creditors worse off than if the company was simply liquidated. That offer would have given creditors bonds valued at $127 million. The updated bid includes an option for creditors to receive cash payments if they do not accept bonds. VarigLog also agreed to invest $75 million into airline assets within 48 hours of a completed agreement
Cargo company makes bid for Varig
