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British Airways owner IAG launched a heavily discounted rights issue on Thursday to raise 2.74 billion euros ($3.2 billion) to help strengthen its finances, which have been squeezed by the coronavirus pandemic.

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LONDON, Sept 10 (Reuters) - British Airways owner IAG ICAG.L launched a heavily discounted rights issue on Thursday to raise 2.74 billion euros ($3.2 billion) to help strengthen its finances, which have been squeezed by the coronavirus pandemic.

Under the terms of the fully underwritten capital increase, announced in July and approved by shareholders on Tuesday, shareholders can subscribe to three new shares for every two they own.

IAG said it will issue 2.97 billion new shares at 0.92 euros, representing a 36% discount to the theoretical ex-rights price based on the closing price on Wednesday.

The groups largest shareholder, Qatar Airways Group, which has a 25.1% holding, has undertaken to subscribe for its pro-rata entitlement.

IAG, which also owns Iberia, Aer Lingus and Vueling airlines, is launching the rights issue under new chief executive Luis Gallego, the Spanish insider who replaced long-time boss Willie Walsh on Tuesday.

Like all airlines, IAG is struggling to recover from the pandemic and capacity in Europe is still less than half of last years. An uneven patchwork of travel restrictions and quarantine rules across Europe continues to hurt the industry.

IAG said the capital increase would reduce debt on its balance sheet and help it withstand a prolonged downturn in travel.

($1 = 0.8453 euros)

(Reporting by Sarah Young; Editing by Jason Neely and Jan Harvey)

((sarah.young@thomsonreuters.com; +44 20 7542 1109; Reuters Messaging: sarah.young.thomsonreuters@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Reuters

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