The price of Aer Lingus shares will be announced this morning with strong indications late last night it will be at the lower end of the published range, close to €2.20 a share, valuing the airline at over €1.1 billion.
Last night officials from the Department of Finance and the Department of Transport met with the airline and the banks advising on the sale to agree on the price the shares will list at in Dublin and London from October 2nd.
It follows a fortnight of intense marketing after which investors were asked to indicate their interest. The Government and the airline had originally set a range of between €2.10 and €2.70.
A price of €2.20 a share would value the company at more than €1.1 billion. The airline would raise €534 million from the sale, while the Government is set to get cash of over €200 million for its stake, which will fall from 85 per cent to around 28 per cent.
The Government is expected to sell another 3 per cent to the airline's employees over the next few years in order to allow them build their stake back up to 15 per cent.
The Government's remaining stake will be worth around €330 million. The Minister for Transport, Martin Cullen, is expected to express satisfaction today with the price achieved.
Retail investors have shown significant interest in the shares, even though there was a €10,000 minimum investment required. Many placed larger than expected orders, in some cases of over €50,000, according to Dublin broking sources.
Other sources said last night that there had been strong late interest from large institutions, but at the lower end of the indicative price range. Sources said demand at the lower price level was double the number of shares available.
Pricing the stock at the lower end of the valuation range should allow investors to benefit from a lift in the share prices once the company lists in Dublin and London.
A senior source close to the privatisation said last night: "The Government will get cash and retain a significant shareholding. It is not reasonable to portray it as something sold on the cheap."
The Government could face criticism from the Opposition parties for not maximising the Exchequer's share of the sale, although Mr Cullen has always maintained that the first priority of the privatisation was to address the airline's capital requirements.
In order to prevent short-term selling of the shares, Aer Lingus is offering bonus shares for those who remain as investors until October 1st, 2007.
There has been huge inter-national interest in the flotation. Aer Lingus is the first airline to list on the London stock exchange in six years. The recent softening in oil prices has helped the marketing of the offer, but equally some investors are worried about the com-pany\222s future earnings potential.
An agreement on an "open skies" regime between the EU and US is regarded by most observers as a key driver of the airline's share price for the future.