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UPDATE 1-Cimber Sterling gets 165 mln DKK lifeline
July 7, 2011 / 7:24 AM / in 6 years

UPDATE 1-Cimber Sterling gets 165 mln DKK lifeline

* Says to receive 165 mln DKK from Ukrainian investor

* Mansvell Enterprises to become new majority shareholder

* Says new owner to create a regional Nordic airline

(Adds details, background, share price)

COPENHAGEN, July 7 (Reuters) - Struggling Danish airline Cimber Sterling has received a 165 million Danish crowns ($31.9 million) lifeline and will be part of a new Nordic airline.

The smaller rival to Scandinavian SAS and Norwegian Air Shuttle on Thursday confirmed the deal into which it entered on a non-binding basis last month , and which will give Ukrainian billionaire Igor Kolomoisky a stake of about 70 percent.

Cyprus-based Mansvell Enterprises, 75 percent-owned by Kolomoisky, recently acquired Swedish regional airlines Skyways which operates out of Stockholm, and City Airline, which operates out of Gothenburg.

“Besides significantly strengthening the capital base of Cimber Sterling, it is the intention of Mansvell to create a leading Nordic regional airline,” Cimber Sterling said in the statement.

“Mansvell will conclude a significant step towards this ambition.”

Mansvell will subscribe to 110.5 million new shares -- with a nominal value of 1 crown each -- at a price of 1.50 crowns by way of a cash contribution, the airline said.

Extraordinary costs incurred last winter, higher fuel prices and other cash tied up elsewhere had put pressure on the airline’s cash resources and left it “very vulnerable”, it said in the statement.

“In preparation of the annual report for the financial year 2010/11, it has become evident the equity in the company is lost,” Cimber said.

“...the board of directors has resolved that Cimber Sterling will not be able to operate on a standalone basis but needs new equity and cash resources to service its creditors,” it said.

A substantial part of the proceeds from the new shares would be used to pay creditors, it said.

The airline confirmed its 2010/11 guidance of EBIT before special items of 190-200 million crowns.

Shares in Cimber Sterling fell 2 percent by 0704 GMT, underperforming a 0.2 percent rise in the Copenhagen bourse’s benchmark index .

Its shares leapt as much as 59 percent to a six-month high in June on newspaper reports that Kolomoisky was in talks to buy the company.

($1=5.169 Danish Crown)

(Reporting by Mette Fraende; Editing by David Hulmes)

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