Air France-KLM launches a capital increase
Roissy, 12 April 2021
Air France-KLM launches a capital
increase without shareholders’ preferential subscription rights, by
way of a public offering and with a 3-day priority subscription
period on an irreducible basis and on a reducible basis granted to
existing shareholders, for an amount of approximately €988 million,
which may be increased to a maximum amount of €1,136 in the event
of the exercise in full of the increase option1
Launch of the Private
Placement
Subscription price per new
share between €4.84 and €5.31
Air France-KLM (the “Company”)
announces today the launch of a capital increase without
shareholders’ preferential subscription rights by way of a public
offering and with a priority subscription period on an irreducible
and reducible basis granted to existing shareholders (the
“Capital Increase”) for an amount of approximately
€988 million, which may be increased to €1,136 million in the event
of the exercise in full of the increase option (the
“Increase Option”).
The net proceeds of the Capital Increase are
expected to amount to €980 million (which may be increased to
€1,126 million in the event of the exercise in full of the Increase
Option. The net proceeds of the Capital Increase will be allocated
to strengthen the equity of Air France. Air France will use the
allocated amount to consolidate its liquidity and finance general
corporate purposes in the context of the Covid-19 crisis.
The Capital Increase will lead to the issuance
of 186 million new shares, which may be increased to 214 new shares
in the event of the exercise in full of the Increase Option
(“New Shares”), corresponding to a maximim of 50%
of the Company’s share capital.
This press release relates to the launch of the
Private Placement (as defined below).
In the context of the recapitalization plan, the
Company will also proceed with the issue of undated deeply
subordinated notes (recorded as equity in the Company's
consolidated financial statements) for a total amount of €3
billion, subscribed in full by the French State by way of set-off
on claims it holds on the Company pursuant to the shareholders’
loan granted in May 2020, fully drawn for the amount of €3 billion
(the “Super-Subordinated Notes”).
This issue will be composed of three tranches
with a perpetual maturity and a nominal amount of €1 billion each,
with respective redemption options (Non Call) at 4, 5 and 6 years,
and bearing interest at 7.00%, 7.25% and 7.50% respectively until
these dates. Interest on the Super-Subordinated Notes will be
capitalized.
These initial interest rates of each tranche of
the Super-Subordinated Notes will be revised on the first early
redemption date at the option of the Company of the relevant
tranche and every 5 years thereafter, on the basis of the 5-year
Euribor mid-swap rate increased by the initial margin retained for
the initial fixed interest rate and the applicable Step-Up
margin.
The interest rate would also be adjusted by
applying the Step-Up margins from the first early redemption
date:
-
4-year Super-Subordinated Notes: 1.50% as of the fifth year then
3.00% as of the eighth year onwards;
-
5-year Super-Subordinated Notes: 0.75% from sixth year then 2.75%
from the eighth year onwards;
-
6-year Super-Subordinated Notes: 0.50%% from the seventh year then
2.50% from the eighth year onward.
In the event of:
- a third party, acting alone or in concert, holds more than 30%
of the share capital of Issuer;
- non-approval by the shareholders’ general meeting of a project
of issuance of shares (or any other securities giving right to
shares of the Issuer), submitted by the board of directors of the
Issuer, enabling the French State to convert in shares of the
Company all or part of the TSS held by the French State ; or
- implementation by the Issuer, without prior consent of the
French State, of an issuance of shares (or other securities giving
right to shares of the Company), except if such issuance of shares
(or other securities giving right to shares of the Company) is
realised with preferential subscription rights or with priority
subscription period and that the French State is able to subscribe
such shares (or other securities giving right to shares of the
Issuer) by way of set-off (compensation de créances) with the
Super-Subordinated Notes,
The Company may, at its sole discretion, redeem
in full the Super-Subordinated Notes remaining outstanding, failing
which the applicable interest rate shall be increased by an
additional margin of 5.50% per annum from the date of occurrence of
any of the events referred to in (i), (ii) or (iii). Such interest
rate adjustments shall be cumulative, provided, however, that the
cumulative adjustments shall not exceed 11.00% per annum.
It is specified that in the event that the
interest rate resulting from the above principles is lower than the
minimum rate provided for by the decision of the European
Commission of April 5, 2021 authorizing the subscription of
Super-Subordinated Notes by the French State, the applicable rate
will be equal to the latter rate.
The Company would be granted with the option to
defer the payment of interest, in whole or in part, at the
Company's option, the payment of interest being nevertheless
mandatory in the event of payment of dividends or repurchase of
equity securities, subject to certain conditions.
These Super Subordinated Notes may be converted
by way of set-off (compensation de créances) in the context of
future issuances of quasi-capital securities or capital
increases.
This transaction will strengthen Air France's
equity by €3 billion in accordance with IFRS accounting standards,
without impact on cash flow, while increasing the Air France's
flexibility in its profile of debt repayment.
Priority subscription
period
Subject to the approval of the Prospectus (as
defined below) relating to this transaction by the Autorité des
marchés financiers (the « AMF »), the
Company’s existing shareholders (as of the record date of 12 April
2021) will be granted a 3-day priority subscription period on an
irreducible basis (à titre irréductible) and on a reducible basis
(à titre réductible), which will run from 13 April 2021 to 15 April
2021 (inclusive) at 17.00 (Paris time). Such priority subscription
period will not be listed nor transferable.
In the context of the priority subscription
period, the Company’s existing shareholders may subscribe (i) on an
irreducible basis (à titre irréductible) up to their shareholding
in the capital of the Company and (ii) on a reducible basis (à
titre réductible) to a number of shares greater than that to which
they can subscribe on an irreducible basis within the limit of 5
times their demand on a reducible basis for one (1) share
subscribed on an irreducible basis. Subscriptions made on a
reducible basis will be allocated in proportion to their requests
on an irreducible basis.
Private placement and public
offering
The New Shares not subscribed for during the
priority subscription period as described above are being offered
in a global offering including:
- a private placement to institutional investors, within and
outside of France, excluding certain countries, in particular the
United States of America, Japan, South Africa and Australia, that
will be executed through a bookbuilding process on 12 April 2021
after market close (the “Private Placement”);
- a public offering in France for retail investors principally,
which will run from 13 April 2021 until 15 April 2021 (inclusive)
at 17.00 (Paris time) (the “Public Offering”),
subject to the approval by the AMF of the Prospectus (as defined
below) relating to this transaction.
Orders placed in the Public Offering and Private
Placement might be subject to reduction depending on the results of
the priority subscriptions on an irreducible basis and reducible
basis received during the priority subscription period.
The subscription price of the New Shares in the
context of the priority subscription period and the Public Offering
will be equal to the Private Placement subscription price of the
New Shares and will be set between €4.84 and €5.31 per share.
The subscription price will be communicated in a
press release published at the latest on 13 April 2021 before
market open.
The New Shares, which will entitle their holders
to any dividends declared by the Company as from the date of
issuance, will be, as from their issuance date, fully fungible with
the Company’s existing shares and will be traded under the same
trading line and ISIN code as the Company’s existing shares (ISIN
code FR0000031122).
Intentions and subscription commitments
of the main shareholders
Subscription commitment from the French
State
The French State, board member of the Company
and holding 428,634,035 shares of the Company (i.e. 14.3% of the
share capital) as of the date this press release, committed on 12
April 2021 to subscribe up to a maximum of 65.9% of the Capital
Increase (excluding the Increase Option) corresponding to a maximum
amount of €650.8 million2 (i) on an irreducible basis (à titre
irréductible) up to its shareholding in the capital of the Company,
by subscribing 26,587,276 New Shares for an amount of approximately
€141,2 million3 and (ii) on a reducible basis (à titre réductible)
by subscribing 95,972,975 New Shares for a maximum amount of €509,6
million4, so as not to hold more than 29.9% of the Company's share
capital following the completion of the Capital Increase.
Subscription commitment from China Eastern
Airlines
China Eastern Airlines, which holds 37,527,410
shares of the Company (i.e. 8.8% of the share capital and 10.5% of
the voting rights) as of the date this press release, committed on
2nd April 2021 to subscribe (i) on an irreducible basis (à titre
irréductible) up to its shareholding in the capital of the Company,
by subscribing 23,944,689 New Shares, for a maximum amount of
approximately €127.1 million5 and (ii) on a reducible basis (à
titre réductible) by subscribing 7,652,559 New Shares for a maximum
amount of €40.6 million6, in order to hold following the completion
of the Capital Increase a fraction of the share capital
representing less than 10% of the share capital of the Company.
The subscription commitments described hereabove
are referred to as the “Subscription
Commitments”.
The Subscription Commitments total approximately
€777.9 million and represent approximately 78.7% of the amount of
the Capital Increase. The Subscription Commitments will
respectively be terminated in the event the placement and
underwriting agreement entered into with the Bank Syndicate (as
such term is defined below) would itself be terminated.
The Dutch State, which holds 60,000,000 shares
of the Company (i.e. 14.0% of the share capital) as of the date of
this press release, has informed the Company of its intention not
to participate in the Capital Increase.
Delta Air Lines, which holds 37,527,410 shares
of the Company (i.e. 8.8% of the share capital) as of the date of
this press release, has informed the Company of its intention not
to participate in the Capital Increase.
The Company is not aware of the intentions of
its other shareholders in relation to the Capital Increase.
Legal Framework
The Capital Increase was decided by the board of
directors of the Company on 5 April 2021 pursuant to the 19th
resolution of the combined shareholders’ meeting of the Company
held on 26 May 2020 and was voted by all the directors that took
part to the vote.
The European Commission notified to the French
State its favourable decision regarding the participation of the
latter to the Capital Increase on 5 April 2021 pursuant to the
temporary framework for State aid mesures to support the economy in
the current COVID-19 outbreak. This participation is subject to
certain commitments by the French State vis-à-vis measures that
need to be implemented by the Company (see the Company’s press
release on 6 April 2021). In this context, the French State will
have to submit an exit strategy to the European Commission within
12 months. The exit of the French State could, among other things,
take the form, with respect to the Super-Subordinated Notes, of
their redemption by sale on the market, and/or their direct
redemption or by way of set-off (compensation de créance) against
equity securities, and/or securities giving access to the capital),
as mentioned in the press release of April 6, 2021. With respect to
the shares subscribed in the context of the Capital Increase, they
will be sold by the French State at market conditions. In
accordance with the provisions of the Temporary Framework, if these
Covid-19 recapitalization measures notified by the French State for
the benefit of Air France and the Company (in respect of hybrid
instruments and capital issuance) are not significantly reduced at
the end of a six-year period, alternative measures with respect to
Air France will have to be notified by the French State to the
European Commission.
Underwriting
The Capital Increase is underwritten by way of a
placement and underwriting agreement signed on 12 April 2021
between the Company and the Bank Syndicate (as such term is defined
below). Under the terms of the placement and underwriting
agreement, the underwriters undertook to, severally but not jointly
(sans solidarité), subscribe the New Shares that are not subscribed
at the end of the subscription period, so that the Capital Increase
(excluding the Increase Option), is, taking into account the
Subscription Commitments, subscribed for an amount representing
100% of the initial amount.
This underwriting agreement does not constitute
a performance guarantee (garantie de bonne fin) within the meaning
of Article L.225-145 of the French Commercial Code.
Lock-up commitments
The Company has agreed to a lock-up period
starting from the signature of the placement and underwriting
agreement and expiring 90 calendar days following the settlement
and delivery date of the New Shares, subject to certain
exceptions.
Each of the French State, China Eastern
Airlines, the Dutch State and Delta Airlines has agreed to a
lock-up period of 90 calendar days after the date of settlement and
delivery of the New Shares, subject to customary exceptions.
Crédit Agricole Corporate and Investment Bank,
Deutsche Bank, HSBC and Natixis are acting as Joint Global
Coordinators, Joint Lead Managers and Joint Bookrunners (the
“Joint Global Coordinators”), Banco Santander and
Société Générale are acting as Joint Lead Managers and Joint
Bookrunners (the “Joint Bookrunners” and together
with the Joint Global Coordinators the “Bank
Syndicate”).
Indicative Timetable
5 April 2021 |
Meeting of the Board of Directors subdelegating to the Chief
Executive Officer the authority to decide and implement the Capital
Increase |
6 April 2021 |
Publication of a press release related to the contemplated
recapitalization plan |
12 April 2021 |
Decision of the Chief Executive Officer of the Company deciding the
launch of the Capital IncreasePublication of a press release
announcing the launch of the Capital Increase Signing of the
placement and underwriting agreementOpening of the bookbuilding
process for the Private PlacementClosing of the bookbuilding
process for the Private PlacementSetting of the subscription
priceApproval of the Prospectus by the AMF |
13 April 2021 |
Publication (before market opens) of the press release announcing
the closing of the bookbuilding process, the subscription price,
the availability of the prospectus and the beginning of the
priority subscription period and of the public offering Notice
published by Euronext announcing the opening of the priority
subscription period and the Public Offering Opening of the priority
subscription period and of the public offering |
15 April 2021 |
Closing of the priority subscription period and of the public
offering at 5:00pm (Paris time) |
19 April 2021 |
Potential exercise of the Increase OptionPublication by the Company
of the press release announcing the results of the Capital
IncreaseNotice published by Euronext announcing the priority
subscription period and the Public Offering results and admission
of the New Shares to trading |
22 April 2021 |
Issuance and admission to trading of the New Shares on Euronext
Paris and Euronext AmsterdamSettlement and Delivery of the New
Shares |
Air France-KLM and China Eastern
Airlines to reinforce their partnership
In the context of the participation of China
Eastern Airlines to the share capital increase of Air France-KLM,
both airline groups have decided to extend the scope of their
partnership through :
- an intensified commercial cooperation and an extended
collaboration to non-commercial related activities (e.g.
ground services, catering or maintenance) ;
- an increased footprint on the Beijing market, with the
Paris-Beijing and Amsterdam-Beijing routes joining the current
Joint Venture existing between Air France-KLM and China Eastern
Airlines when the conditions are satisfied.
Air France-KLM and China Eastern Airlines are
historical partners, with a codeshare cooperation that started in
2000 on the Paris-Shanghai route, a first Joint Venture agreement
signed between Air France and China Eastern Airlines in 2012, and
an extension of this agreement to KLM in 2016. China Eastern
Airlines took an equity stake in the Company in 2017, shaping the
ambition for a long term strategic partnership.
With this expansion of the cooperation between
Air France-KLM and China Eastern Airlines, both airline groups are
clearly paving the way to create the most efficient and powerful
Joint Venture between Europe and China.
Availability of the
prospectus
The prospectus (the
“Prospectus”), comprising (i) the universal
registration document of the Company filed with the AMF on 7 April
2021 under number D.21-0270 (the “Universal Registration
Document”), and (ii) a securities note (including a
summary of the Prospectus) (the “Securities
Note”), will be made available once it receives approval
by the AMF, which is expected on 12 April 2021 at the latest.
Copies of the Prospectus will be made available
free of charge at the Company’s headquarters, located at, 2, rue
Robert Esnault-Pelterie - 75007 Paris, France. The Prospectus is
also available on the Company’s website (www. airfranceklm.com) and
on the AMF’s website (www.amf-france.org).
Potential investors are advised to consider
carefully the risk factors described in chapter 3.1 “Risk factors”
of the Universal Registration Document and chapter 2 “Risk factors”
of the Securities Note, that will available on the Company’s
website (www.airfranceklm.com) and on the AMF website
(www.amf-france.org), before deciding whether to invest. Should all
or any part of these risk factors materialize, the Company’s and
the group’s businesses, financials, results or ability to reach its
guidance may be negatively affected.
Investor
Relations
Press
Olivier
Gall
Michiel
Klinkers
Press office
+33 1 49 89 52 59
+33 1 49 89 52
60
+33 1 41 56 56 00
olgall@airfranceklm.com
michiel.klinkers@klm.com
Website: www.airfranceklm.com
IMPORTANT INFORMATION
This press release includes "forward-looking
statements". All statements other than statements of historical
facts included in this press release, including, without
limitation, those regarding Air France-KLM’s financial position,
business strategy, plans and objectives of management for future
operations, are forward-looking statements. Such forward-looking
statements involve known and unknown risks, uncertainties and other
factors, which may cause the actual results, performance or
achievements of Air France-KLM, or industry results, to be
materially different from any future results, performance or
achievements expressed or implied by such forward-looking
statements. Such forward-looking statements are based on numerous
assumptions regarding Air France-KLM’s present and future business
strategies and the environment in which Air France-KLM will operate
in the future. Additional factors could cause actual results,
performance or achievements to differ materially. Air France-KLM
expressly disclaims any obligation or undertaking to update or
revise any forward-looking statements contained in this press
release, whether as a result of new information, future
developments or otherwise.
This press release does not constitute an offer
to sell nor a solicitation of an offer to buy, nor shall there be
any sale of ordinary shares in any state or jurisdiction in which
such an offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
state or jurisdiction.
The distribution of this document may, in
certain jurisdictions, be restricted by local legislations. Persons
into whose possession this document comes are required to inform
themselves about and to observe any such potential local
restrictions.
This press release is an advertisement and not a
prospectus within the meaning of Regulation (EU) 2017/1129 of the
European Parliament and of the Council of 14 June 2017 (as amended,
the “Prospectus Regulation”). Potential investors are advised to
read the prospectus before making an investment decision in order
to fully understand the potential risks and rewards associated with
the decision to invest in the securities. The approval of the
prospectus by the AMF should not be understood as an endorsement of
the securities offered or admitted to trading on a regulated
market.
With respect to the member states of the
European Economic Area (other than France) (each a “Relevant Member
State”), no action has been undertaken or will be undertaken to
make an offer to the public of the securities referred to herein
requiring a publication of a prospectus in any Relevant Member
State. As a result, the securities may not and will not be offered
in any Relevant Member State except in accordance with the
exemptions set forth in Article 1 (4) of the Prospectus Regulation
or under any other circumstances which do not require the
publication by Air France-KLM of a prospectus pursuant to Article 3
of the Prospectus Regulation and/or to applicable regulations of
that Relevant Member State.
The distribution of this press release has not
been made, and has not been approved, by an “authorised person”
within the meaning of Article 21(1) of the Financial Services and
Markets Act 2000. As a consequence, this press release is only
being distributed to, and is only directed at, persons in the
United Kingdom that (i) are “investment professionals” falling
within Article 19(5) of the Financial Services and Markets Act 2000
(Financial Promotion) Order 2005 (as amended, the “Order”), (ii)
are persons falling within Article 49(2)(a) to (d) (“high net worth
companies, unincorporated associations, etc.”) of the Order, or
(iii) are persons to whom an invitation or inducement to engage in
investment activity (within the meaning of Article 21 of the
Financial Services and Markets Act 2000) in connection with the
issue or sale of any securities may otherwise lawfully be
communicated or caused to be communicated (all such persons
together being referred to as “Relevant Persons”). Any investment
or investment activity to which this document relates is available
only to Relevant Persons and will be engaged in only with Relevant
Persons. Any person who is not a Relevant Person should not act or
rely on this document or any of its contents.
This press release may not be published,
distributed or transmitted in the United States (including its
territories and dependencies).
This press release does not constitute or form
part of any offer of securities for sale or any solicitation to
purchase or to subscribe for securities or any solicitation of sale
of securities in the United States. The securities referred to
herein have not been and will not be registered under the U.S.
Securities Act of 1933, as amended (the “Securities Act”) or the
law of any State or other jurisdiction of the United States, and
may not be offered or sold in the United States absent registration
under the Securities Act or pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the
Securities Act. Air France-KLM does not intend to register all or
any portion of the securities in the United States under the
Securities Act or to conduct a public offering of the securities in
the United States.
This announcement may not be published,
forwarded or distributed, directly or indirectly, in the United
States of America, Australia or Japan.
1 Based on the upper end of the indicative price range of the
private placement, i.e. €5.31
2 Based on the upper end of the indicative price range of the
Private Placement, i.e. €5.31
3 Based on the upper end of the indicative price range of the
Private Placement, i.e. €5.31
4 Based on the upper end of the indicative price range of the
Private Placement, i.e. €5.31
5 Based on the upper end of the indicative price range of the
Private Placement, i.e. €5.31
6 Based on the upper end of the indicative price range of the
Private Placement, i.e. €5.31
- Press release Air France-KLM launches financial operation
ENG
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