Government to Sell Minority Shares in Budapest Airport Zrt.

In a resolution, the government has given the minister for national development, who is also responsible for the supervision of public assets, the green light to exercise an option to sell the government's minority shares in Budapest Airport Zrt. through the Hungarian State Holding Company (MNV Zrt.).

Due to the irresponsible privatisation of the formerly profitable and fully state-owned company under the socialist government in 2005, the minority shares presently owned by the government have lost much of their value. The sale is on the agenda because the currently held government shares cannot provide the holder with any significant influence over the strategic operation of Budapest Airport.

The institutionalised privatisations conducted by the previous governments have forced the Hungarian State to follow a path of necessity, from which one can only deviate by pursuing responsible and effective asset management practices. In order to minimise the losses caused by privatisation, the sale of the remaining shares in Budapest Airport Zrt. is an effective solution since the Hungarian State prefers to hold minority company interests in state ownership if they can be operated profitably in light of long-term economic and other prioritised considerations.

The option to repurchase majority interest was not a viable alternative given that the Hochtief Group wishes to sell its company that operates six of its international airports in a procedure separate from the parent company on the international market, which may see the emergence of a strategic investor or even a purely financial investor.

The state may exercise its put option before 18 June 2011 and has the right to notice the majority owner. The indirect Hungarian subsidiary of Hochtief and hence also the majority owner of Budapest Airport Zrt., Airport Hungary Tanácsadó Kft. (AHUK) must purchase the shares according to the shareholders' agreement. The selling price of the minority shares is approximately 36.6 billion forints today, but with the expiry of the sale option, the fixed selling prices determined in the privatisation agreement are no longer guaranteed. Privatised under disputed and contradictory circumstances and then resold, Budapest Airport Zrt. – due to its unprofitable economic performance – has not been able to pay dividends in recent years to MNV Zrt, who had only received dividend compensation from the co-owner (AHUK), which was much smaller in value than the dividends after profit; but even this was no longer due and payable to the state holding company after 2010.

Also, according to the Act on state holdings, the shares held in Budapest Airport Zrt. are not considered as assets that ought to be permanently kept in state ownership.

(Ministry of National Development , Department of Communication)