Eurocypria acquired by state for CYP 13.4 mln

Cyprus Airways has accepted the Government’s proposal for the acquisition of 100% of the share capital of its subsidiary, Eurocypria Airlines Ltd, by the State against the sum of CYP 13,425,000, which represents the market value of the Company.

The sale price was agreed taking into account two valuations carried out by PricewaterhouseCoopers on behalf of Cyprus Airways and HSBC on behalf of the Government and after negotiations between the two parties.

The sale of Eurocypria falls under the Cyprus Airways Restructuring Plan, which has been submitted to the European Commission by the Government of the Republic.

Eurocypria, which is entirely debt free and has just acquired a fifth Boeing aircraft, could also be used if CAIR staff go on strike and cut the island’s links to the outside world.

The final step towards the purchase of Eurocypria was given the green light at Thursday’s cabinet meeting when ministers ratified the move after several months of negotiations.

But the European Commission raised doubts about the sale some months ago when it was informed by CAIR only weeks after it had submitted its restructuring plan to bloc.

Worried that the sale of Eurocypria to the government could be classed as indirect state aid to CAIR, which is prohibited under EU rules, the Commission launched a formal investigation.

But the government insists that it was natural that the Commission would have to ask about the proposal by the government to buy CAIR’s charter firm Eurocypria as this proposal had been submitted as an addendum after the rescue package was handed over to Brussels.

It said if Eurocypria was bought from CAIR at market value, rather than at an inflated price, it could not be considered state aid.