Brazil: Bankrupt Varig Airlines Goes to Auction But Nobody Wants It

NV Participações, a consortium led by workers of Brazilian Varig Airlines was the only group to bid for the bankrupt company when it went on auction this Thursday, June 8.

Even though the minimum price stipulated by the auction was US$ 860 million, NV Participações offered only US$ 449 million or 1.01 billion reais. From this total only US$ 128 million would be paid in the cash. The rest would come in form of debentures and participation of future profits.

The offer is for the whole of Varig, with its domestic and international routes. Judge Luiz Roberto Ayoub will have until Friday, June 9, to decide if the bid is valid.

In the first phase of the auction no one placed a bid for at least the minimum US$ 860 million. In the second phase, when smaller bids were allowed, only NV Participações had anything to offer.

Other groups participating in the auction, TAM, Gol, OceanAir and Céu Azul, representing the American investment fund Brooksfield, had nothing to offer.

For Milton Zuanazzi, director of Brazil’s National Agency of Civil Aviation (ANAC), Varig’s auction hasn’t finished yet.  According to him, nothing will happen before judge Ayoub makes his decision.

Ocean Air’s president, Carlos Ebner, said that his company didn’t make any offer because there was very little time to arrange all the financial details before the auction.

Varig, which once was the most important Brazilian Airline, due to mismanagement has been accumulating deficits for the last two decades. Today the company is deep in debt owing more than US$ 3 billion, 65% of which to the Brazilian government.

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