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. Last Updated: 07/27/2016

AirBridge Seals Buy of Hungary's Malev

APBoris Abramovich, right, and Malev officials toasting the airline's sale Friday.
BUDAPEST -- Hungary's privatization agency said it agreed to sell national airline Malev to Russia's KrasAir for 200 million forints ($1.04 million) and the buyer also agreed to inject 50 million euros ($66 million) into Malev.

Of the 50 million euro equity increase, 20 million euros will be provided immediately and the remainder later, when necessary, the privatization agency said Friday.

KrasAir, owned by businessman Boris Abramovich, also agreed to repay or refinance 13 billion forints of Malev's debts while another 20 billion forints of Malev's state-guaranteed debts will be backed by a 32 million euro bank guarantee.

Hungary selected KrasAir in early February to buy Malev after three failed privatization attempts over the past two and a half years. The deal is expected to close in March, when KrasAir will pay the 200 million forint purchase price and the 20 billion forint equity increase.

As around 20 billion forints of Malev's debt will remain state guaranteed, the privatization agency will remove some of Malev's assets before the sale and use them as collateral for the debt.

A new asset management firm will take over the debt as well as some of Malev's aircraft, its brand name, and the jet fuel pipeline that connects Budapest's airport with the country's main oil refinery.

Malev will then rent these assets from the state-owned asset management firm.

Once the debt is repaid, Malev will be able to buy back these assets, the privatization agency added.

Including its international sales staff, Malev employs around 3,300 people, and news reports earlier indicated KrasAir plans to reduce this number sharply. Question on this at a news conference, KrasAir representatives declined to comment.