Varig acquisition company obtains $17.1 million in financing from LAN Airlines

By Caroline Salls

Pittsburgh, Feb. 1 - Varig SA acquisition company VRG Linhas Aereas SA (New Varig) received $17.1 million in financing from LAN Airlines SA and its related companies, according to a LAN news release.

The loans may be converted into shares of New Varig, and, if LAN were to exercise its option to convert the loans into stock, the company would then have a minority stake in New Varig.

According to the release, New Varig is a Brazilian airline company formed for the purpose of acquiring part of Varig's assets during its bankruptcy procedures.

LAN said it is currently involved in ongoing negotiations with New Varig's shareholders in order to potentially exercise its option to participate in the company through the capitalization of its loans.

Varig, a Rio de Janeiro, Brazil-based air carrier, filed for Section 304 bankruptcy on June 20, 2005 in the U.S. Bankruptcy Court for the Southern District of New York. Its case number is 05-14400.

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