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May 29, 2024
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Air France-KLM has launched an offering of deeply subordinated undated bonds worth €300 million that may be converted into new shares or are exchangeable for existing shares. The offering, which should help to improve the negative equity position of the airline group, has been anticipated for some time, although it said recently that a date would be subject to market conditions. Air France-KLM launches €300 million bonds offering.

Net proceeds of the €300 million offering will be used to partly repay the €1.2 billion of perpetual bonds that the French state issued in April 2021 as part of a state aid package to bolster the group’s equity position. This was severely affected by the Covid crisis. The bonds of the latest offering will be issued at a nominal value of €100.000.

The new bonds will be placed with qualified investors only. French shipping company CMA CGM, which became a shareholder of Air France-KLM after the €2.3 billion capital increase earlier this year with a nine percent share, has expressed its intention to participate pro-rata in the offering.

Both the French and Dutch states were asked to participate, but have declined. In a letter to the Dutch parliament, the Minister of Finance says that “participation is not needed to safeguard the Dutch public interests.” However, the offering will result in a dilution of approximately 6.8 percent of the outstanding share capital, if the airline group decides to deliver new shares upon conversion. In this event, the Dutch stake will dilute from 9.34 to 8.66 percent.

In a separate transaction that was announced only early last week, Air France-KLM said that it would €1.0 billion of the €3.5 billion French state-backed loan. In December 2021, the airline group already redeemed the first €500 million of the original €4.0 billion loan. The remaining €2.5 billion is due in May 2024 and 2025.

author avatar
Richard Schuurman
Active as a journalist since 1987, with a background in newspapers, magazines, and a regional news station, Richard has been covering commercial aviation on a freelance basis since late 2016. Richard is contributing to AirInsight since December 2018. He also writes for Airliner World, Aviation News, Piloot & Vliegtuig, and Luchtvaartnieuws Magazine. Twitter: @rschuur_aero.

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