TAP ‘deal’ uncovered: hurdles still ahead

With more details of TAP Air Portugal’s privatisation deal revealed in the national press today, the bottom line is still that there are a number of key hurdles to go – the legislative elections this autumn being one of the largest.

If the current PSD/CDS-PP coalition is not successful, the most likely party to pip them to victory is the PS (Socialists) whose leader is adamant that he will tear up the deal and send everyone back to the drawing board.

António Costa has long declared his party would only accept a 49% participation in TAP, keeping the majority share with the Portuguese State.

Meantime, details of this long drawn-out deal have started emerging.

The ‘improved offer’ from the Gateway consortium – led by airline boss national David Neeleman, backed by Portuguese transport mogul Humberto Pedrosa – is €354 million in cash which could, depending on the performance of the airline this year, increase to “arrive near €500 million”, writes Público.

The instant result for the government will be €10 million, in return for 61% of TAP’s capital – but there are other shareholdings “which for now remain in the hands of the State”, explains the paper, “which could reach €140 million”.

The €354 million will be ploughed into the airline that is said to have as much as a billion euros of debt. Transport minister Sérgio Monteiro explained that this is what tipped the decision made by the Council of Ministers yesterday.

The other bid in the pipeline – from airline boss Germán Efromovich who Público explained went to the extent of giving up his Polish passport in order to qualify for the ‘race’ – was based less on “hard cash” and more on aircraft that he proposed putting in to TAP’s current fleet.

In the press conference that went ahead yesterday after the sale was announced, Monteiro explained that Gateway had assured that TAP’s maintenance headquarters and administrative base are assured in Portugal “for at least 10 years”, with the “hub” (which translates as the operational centre) centred on national soil “for a minimum of 30 years”.

Gateway has “assured workforce stability” as per the various agreements already forged with the government, Monteiro added – which means there will be no collective sackings while the State is a shareholder for “at the minimum, a period of 30 months”.

Público explained that Monteiro “guaranteed” that any violation of these agreements would result in “daily fines, the cancellation of the purchase option and the right of the State to effect reversion of the deal” without being in any way obliged to compensate the ‘buyer’.

Absent so far has been any reaction from the various unions involved – many of whom have been in direct conflict with the government as recently as a couple of months ago, despite the “various agreements” cited by Monteiro.

Storm clouds ahead

Absent too is any reaction from the ‘loser’ in this long-running race: Bolivian born Germán Efromovich who, like Neeleman, appears to have a stack of nationalities up his sleeve.
Born to Polish parents and thus Polish by blood, Efromovich – a Colombian citizen and naturalised Brazilian – has warned that he will be taking legal action over any deal that sees Gateway win, as he believes the “north American is the one that leads it”, explains Público.

If that leaves readers bemused, this is because up until recently Neeleman was described as a Brazilian. He is, in fact of Dutch-American parentage but for reasons no-one appears to be volunteering is now being described as an American-Brazilian.

Efromovich’s beef lies with the fact that Neeleman is Gateway’s minority shareholder, when in fact Efromovich believes Neeleman is the man holding the strings.

Before we get to introducing the only Portuguese in the picture – transport boss Humberto Pedrosa – we should add that Efromovich may well be upset over the deal as this was the second time he had tried to take over TAP.

Other problems could come from Brussels – which has to give its okay to the deal – and then of course there is the issue of the looming election result.

But Monteiro was upbeat yesterday. He told the press conference he is confident that there are “practically no risks” from Brussels’ competitions’ authority, and he doubts that any subsequent government would renege on a deal that has come so far.

This last statement has been refuted, nonetheless, by the leader of the only party that seems to be in a position to threaten the current coalition.

Quiet too is the issue of “when” all this money will be flooding into TAP.

If the airline’s current boss Fernando Pinto knows, he is keeping quiet about it. Describing the “moment that will stay in the history of the company” as marking a “new cycle”, Pinto simply said that TAP was entering “a transition period” which would prolong “until the full entry of the new holder of the majority shareholding in the business had been settled”.

This would take “some time”, he told TAP workers in a letter to which Lusa news agency has had access, as “all the formal national and international proceedings have to be concluded”.

Thus while figures are bandied about, and politicians of varying hues either welcome or condemn the deal, many will be asking “Who is Humberto Pedrosa?”

Enter the 15th richest man in Portugal

Surprisingly, as Diário Económico revealed recently, everyone thought David Neeleman was acting alone in his bid for TAP “until one month before the presentation of firm offers” when a Portuguese businessman who had previously backed another bidder who fell by the wayside (millionaire Portuguese aristocrat Miguel País do Amaral) suddenly came into the picture.
Very discreetly, Humberto Pedrosa has established himself as the 15th richest man in Portugal.

Running the hugely competent Barraqueiro transport network of businesses, Pedrosa is no playboy.

At 67 he has worked his socks off for the last 48 years and is now the boss of one of the largest private businesses in the Iberian Peninsula, running road, rail and Metro businesses. Along the way he has done everything, he told Expresso, from driving his own trucks, to taking fares on buses and running his maintenance workshop.

The Abril 25 Revolution was when business started to really move, and bit by bit Pedrosa started expanding and buying up the competition.

Today, his empire employs as many as 5,500 people.

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