Veil Jourde, lawyer Djalilgangate, and White & Case also advised the Reunion region and SEMATRA.
On 25 January 2023, the conciliation protocol was approved by Saint-Denis, a mixed commercial court in Reunion. This protocol established the terms for Air Austral’s restructuring, which was done under the aegis CIRI. This is a new chapter in the history of Air Austral. In 2022, Air Austral reported a turnover in excess of EUR236 millions and employed approximately 900 people on Reunion. It also supports nearly 3,000 indirect jobs.
Freget Glaser & Associes provided advice to the Reunion region as well as SEMATRA in matters of public, privatisation and competition law. The team was led by Liliana Eskenazi, Sandrine Perrotet, and Emmanuel Glaser.
Lawyer Monthly had a pleasure speaking with Emmanuel Glaser and Freget Glaser & Associes
We would love to hear more about the restructuring process and Freget Glaser’s participation in it.
Air Austral began experiencing difficulties in 2020 due to the COVID-19 pandemic. These difficulties became more severe in 2021-2022 as the crisis grew. Air Austral had to seek new financing and increase its capital. The region also wanted to decrease its share of the company’s majority threshold. There were several options, including merging with Corsair. However, none of these options worked out.
Reunion investors made an offer in the summer 2022 to purchase 55% of Air Austral through Run Air. Negotiations began on this basis under the CIRI’s aegis. From the fall 2021, we advised the Sematra and the region on this operation. We provided advice on all aspects of public law, privatisation, merger control, and state aid. We had Djalil Gangate, a Reunion lawyer as our Veil Jourde colleagues who handled the restructuring and corporate aspects.
What were the unique considerations and challenges that had to be considered during the operation?
The many legal aspects of the operation, including competition, state aid and corporate restructuring laws, made this operation particularly complicated. Numerous authorisations were required: the European Commission, as the operation implied significant state aid; and the Privatisation Commission, as the majority capital of Air Austral was originally owned by Sematra, principally the Reunion region, was to be transferred from Sematra to private owners.
Reunion also had special interests that had to be considered and protected. It had founded Air Austral in 90 and supported its growth through good times and bad. The region decided to transfer most of its capital to private investors to reduce its exposure. Air Austral was vital to the local economy, in terms of activity, job creation, and continuity with France’s metropolitan area, so it wanted to retain control.
Due to the very difficult financial position of Air Austral at both the end 2022 and beginning 2023, it was imperative that we obtain all the authorisations necessary for the operation and complete it by January. It was possible because of the coordination between all of these authorities.
Which unique skills and expertise did you bring to the success of the restructuring?
The firm was founded on the belief that there is strong complementarity between private economic law and public competition law. Our unique combination of expertise covers the legal framework for economic intervention by public authorities, merger control procedures, and European state aid regulation.
This was particularly important in an operation where the seller was a local authority subject to specific constraints.