<Lufthansa Puts Its JetBlue Stake On The Block Via Exchangeable Bond>
<FRANKFURT (Dow Jones)--Deutsche Lufthansa AG (LHA.XE) said Thursday it will issue a corporate bond exchangeable into shares of JetBlue Airways Corp. (JBLU), a transaction that could see Lufthansa's stake in the U.S. carrier decline to zero.
The move is part of the German flagship airline's efforts to streamline its activities as it battles soaring fuel costs, intense competition in key markets, and sluggish traffic growth in Europe.
Lufthansa, Europe's biggest carrier by passengers flown, is in the process of selling its loss-making U.K. airline British Midland Ltd., known as bmi. According to U.K. media reports, the German flag carrier is close to getting European Union approval for the sale to British Airways parent company International Consolidated Airlines Group SA (IAG.LN).
Lufthansa said it plans to offer the JetBlue notes, due in 2017, via its unit Lufthansa Malta Blues LP. The notes will be exchangeable into 46.7 million shares in JetBlue, though the airline has an option to redeem the bonds in cash instead.
Lufthansa at present owns around 15.7% in JetBlue, which equates to the amount of shares the notes are exchangeable for.
JetBlue has a market capitalization of around $1.47 billion, valuing Lufthansa's 15.7% stake in the U.S. carrier at around $231 million.
In January 2009, the German carrier acquired a 19% stake in JetBlue for around $300 million, or $7.27 per share, according to Lufthansa's website. JetBlue shares closed Wednesday at $5.22
Lufthansa declined to provide additional details of the planned bond offering or the impact on its holding in JetBlue. Lufthansa Chief Executive Christoph Franz last September first hinted that the German airline may consider selling the JetBlue stake.
At the time, Franz said that the "strategic importance" of JetBlue has diminished over the past few years after United Airlines and Continental Airlines merged to form United Continental Holdings Inc. (UAL).
-By Jan Hromadko, Dow Jones Newswires; +49 69 29 725 503; email@example.com>
Who cares?! The notes are being sold to institutions per the 8k, and are redeemable in 2017. Lufthansa has their own problems and needs the cash badly right now. I would be selling Lufthansa at this point. Looks like Ill be buying more JBLU on this dip...
Did anyone else notice JBLU B/V increase from 5.70 to 6.25???? Nope!