Lufthansa (LH, Frankfurt International) is looking to divest itself of its 15.2% stake in JetBlue Airways (B6, New York JFK) through an early convertible bond buyback. The German carrier said last week that it is offering a cash incentive to holders of a bond exchangeable into JetBlue shares to encourage them to exchange the notes ahead of the 2017 expiration date.
Holders of the notes who accept the offer before 2000 GMT on March 3 will receive an incentive payment of EUR2,500 (USD2,850) per EUR100,000 (USD114,000) principal, while those who accept before the end of March 17 will receive EUR1,750 (USD1,995).
Lufthansa plans to use the funds raised to improve its balance sheet.
jetBlue says the transaction will not impact its various commercial relationships with Lufthansa. However, the future of the German's two jetBlue board seats, which it secured when it acquired a 19% stake in JetBlue in January 2009 for around USD300 million, will only be decided should the early exchange offer be successful.
"Lufthansa and its board representatives have been valued professional colleagues to jetBlue for many years and we expect to continue our various commercial relationships going forward," jetBlue said in a statement.
