Air France-KLM launches a €2.256 billion rights issue to be
subscribed in cash and/or by offsetting claims
Roissy, 24 May 2022
Air France-KLM launches a
€2.256
billion rights issue to
be subscribed in cash and/or by offsetting claims
The Company
is continuing to strengthen its balance sheet and
accelerates the repayment of
state aids,
increasing its
strategic flexibility
Air France-KLM S.A. (“Air
France-KLM”, the “Company”) announces
today the launch of a capital increase with preferential
subscription rights (the "Rights") to existing
shareholders maintained to raise gross proceeds of €2.256 billion
(the “Rights Issue”) through the issuance of 1,928
million new shares in Air France-KLM (the “New
Shares”), to be subscribed in cash and/or by offsetting
claims.
This transaction, which aims to strengthen the
company’s equity and balance sheet, follows the 2021 capital
increase and comes after new recapitalization measures were
announced on February 17th.
- The net proceeds
of the issue will be allocated to repaying the deeply subordinated
bonds issued in April 2021 and held by the French State as well as
strengthening the Company’s equity. As announced at full-year
results on February 17th 2022, the Company intends to free itself
from the conditions set by the European Commission’s temporary
framework and will therefore allocate circa 1.7 billion euros to
the repayment of the "Covid-19 recapitalization aid" granted in the
form of undated subordinated notes (the "TSS
État") issued in April 2021. The remainder will be
allocated to reduce the Company’s net indebtedness.
- This operation,
together with the other contemplated measures to strengthen the
balance sheet and the expected EBITDA recovery, will enable the
Company to strengthen its financial trajectory. The Company’s sound
financial liquidity position (€10.8 billion of cash at hand as of
March 31st 2022) in a better oriented operational context for the
Company, will enable the Company to further repay the French State
Aid over the next quarters. The repayment of the State Aid will
also improve the financing costs of the Company.
- The Company
confirms its objective to reduce its Net debt / EBITDA ratio, to
reach circa 2.0x to 2.5x by 2023.
- The French
State, Air France-KLM’s largest shareholder (28.6%), has informed
the Company of its intention to participate in the Rights Issue, so
that its post-transaction shareholding remains unchanged. This
subscription, should it occur, would be completed through
offsetting claims held by the French State in respect of the deeply
subordinated notes (TSS Etat) issued in April 2021 for an amount of
circa 645 million euro.
- The Dutch State
has informed the Company that it intends to exercise its rights in
proportion to its current shareholding in order for its
shareholding to remain unchanged post Rights Issue, subject to
obtaining the necessary approvals from the Dutch Parliament. In
order to receive these necessary approvals in a timely manner, the
Dutch State is also dependent on the timetable of the Dutch
parliament.
- The transaction
will enable CMA CGM to become a new reference shareholder and an
exclusive strategic partner for the cargo business, as announced on
May 18th. CMA CGM has committed to subscribe to the transaction for
a maximum amount of €400 million (including the acquisition of
Rights) and in such a way that its total shareholding does not
exceed 9% of the Company’s resulting share capital.
- China Eastern
Airlines and Delta Air Lines have committed to participate in the
Rights Issue on a cash neutral basis by subscribing to new shares
through the sale of part of their Rights, using the net proceeds
from selling Rights to CMA CGM.
Benjamin Smith, CEO of Air France –
KLM, has stated that “The operation we are launching today
is the result of the work we have been doing for several months to
consolidate our balance sheet, strengthen our financial autonomy
and regain strategic and operational flexibility. As the recovery
continues and our economic performance recovers, in particular
thanks to our ambitious transformation plan and the structural
benefits it continues to deliver, we want to be in a position to
seize any opportunity in a changing aviation sector and to be able
to accelerate our environmental commitments. I would like to thank
our main shareholders for their renewed support in this operation,
and I am also delighted to welcome CMA CGM to our capital, as a new
reference shareholder and industrial partner in our cargo
activities.”
Key terms and rationale of the
transaction:
- Subscription price: €1.17 per new
share
- Subscription parity: 3 new shares
per 1 existing share
- Theoretical value of the
preferential subscription right: €2.345
- Preferential subscription rights
trading period: from 25 May 2022 to 7 June 2022, inclusive
- Subscription period: from 27 May
2022 to 9 June 2022, inclusive
- Subscription commitments:
€359,923,919 i.e. 15.96% of the total amount of the transaction
(excluding the French State and the Dutch State intentions)
The Rights Issue will be carried out with
preservation of shareholders’ preferential subscription rights,
pursuant to the 20th resolution of the combined general meeting of
the Company’s shareholders of 26 May 2021, and will result in the
issuance of 1,927,902,102 New Shares at a subscription price of
€1.17 per share (i.e., a nominal value of €1, plus an issue premium
of €0.17), to be fully paid up upon subscription, representing
gross proceeds, including the issue premium, of
€2,255,645,459.34.
Holders of existing ordinary shares of the
Company (the “Shares”) recorded on their accounts
as of the end of the accounting day on 24 May 2022 will be entitled
to receive Rights which will be detached from the underlying Shares
on 25 May 2022. Existing Shares of the Company will therefore trade
ex-right from 25 May, 2022. Each existing Share of the Company will
entitle its holder to receive one (1) Right. 1 Right will entitle
their holders to subscribe for 3 New Shares on an irreducible basis
(à titre irréductible), at a subscription price of €1.17 per
Share.
Subscriptions on a reducible basis (à titre
réductible) will be accepted. Any New Shares not subscribed by
subscriptions on an irreducible basis (à titre irréductible) will
be distributed and allocated to the holders of the Rights having
submitted additional subscription orders on a reducible basis (à
titre réductible) subject to reduction in the event of
oversubscription.
Based on the closing price of Air France-KLM
stock on the regulated market of Euronext in Paris on 20 May 2022,
i.e., €4.296, the theoretical value of 1 Right is €2.345 and the
theoretical value of the ex-right share is €1.951.
For information purposes, the subscription price
for the New Shares of €1.17 per share reflects a discount of 40%
compared to the theoretical value of the Company’s ex-right share
price, calculated on the basis of closing price on 20 May 2022, and
a discount of approximately 72.8% to this price.
These values do not presume either the value of
the Rights during their trading period or the ex-right value of the
Company’s shares as recorded in the market.
The Rights Issue will be open to the public in
France only.
Intentions and subscription commitments
of the main shareholders
and Directors
The French State, Air France-KLM’s largest
shareholder (which holds 28.6% of the Company’s share capital and
28.1% of the voting rights) as of the date of this press release,
has informed the board of directors of Air France – KLM of its
intention to participate on an irreducible basis up to the totality
of its Rights, so that its shareholding after the completion of
this Rights Issue remains unchanged. This subscription would be
carried out by way of offsetting the deeply subordinated notes (TSS
Etat) issued by the Company in April 2021. A part of the TSS Etat
will also be reimbursed by a buyback following the completion of
the Rights Issue.
The Dutch State (which holds 9.3% of the
Company’s share capital and 13.8% of the voting rights) has
informed the Company that it intends to fully exercise its rights
in proportion to its current shareholding in order for its
shareholding post Rights Issue to remain unchanged, subject to
obtaining the necessary approvals from the Dutch Parliament. In
order to receive these necessary approvals in a timely manner, the
Dutch State is also dependent on the timetable of the Dutch
parliament.
CMA CGM has entered on 22 May 2022 into a rights
sale and purchase agreement with Delta Air Lines, China Eastern
Airlines and the FCPEs respectively, so as to acquire a total of
70,996,722 Rights, and has committed toward Air France-KLM to (i)
exercise these rights and subscribe to the Rights Issue on a
irreducible basis for an amount of €249,198,494.22 and to (ii)
place a subscription order on a reducible basis for an additional
number of up to 18,358,086 New Shares (or by exercising rights
acquired in the market or off the market), the total corresponding
to a maximum of 9% of the share capital after the Rights Issue.
This subscription commitment is subject to the condition that the
total sum of the subscription price of the aforementioned New
Shares increased by the total price of the Rights acquired by CMA
CGM does not exceed 400 million euros and with no prejudice of the
reduction rate which will be applied to the reducible orders.
China Eastern Airlines, which holds 9.6% of the
capital and 11.4% of voting rights of the Company, and Delta Air
Lines, which holds 5.8% of the capital and 8.6% of the voting
rights of the Company, have both committed to participate in the
Rights Issue on a cash neutral basis through the sale of part of
their Rights to the benefit of CMA CGM in a proportion allowing
them to finance the exercise of the balance of their Rights by
using the net proceeds of this sale (subject to rounding) for an
aggregate amount representing €110,725,424.55.
The subscription commitments of CMA CGM (for the
irreducible basis), Delta Air Lines and China Eastern Airlines
described hereabove are referred to as the “Subscription
Commitments”.
The FCPEs, which hold 2.4% of the capital and
3.6% of the voting rights of the Company, have notified their
intention to participate in the Rights Issue on a cash neutral
basis through the sale of part of their Rights to the benefit of
CMA CGM in a proportion allowing them to partially finance the
exercise of the balance of their Rights by using the net proceeds
of this sale.
The SPAAK (Stichting Piloten Aandelen Air France
- KLM) which holds 1.7% of the capital and 2.5% of the voting
rights of the Company,
has notified their intention to participate in
the Rights Issue on a cash neutral basis through the sale of part
of its Rights in a proportion allowing them to finance the
exercise of the balance of their Rights by using the net proceeds
of this sale.
The Subscription Commitments total approximately
€360 million and represent 15.96% of the amount of the Right Issue.
The Subscription Commitments will respectively be terminated in the
event the underwriting agreement entered into with the Underwriters
(as such term is defined below) would itself be terminated.
Moreover, the French State and the Dutch State have informed the
Company that they intend to subscribe to the rights issue in
proportion to their total respective number of Rights, representing
an additional 37.94% to the amount of the rights issue.
Lock-up
commitments
Air France-KLM has agreed to a lock-up period
starting on the date of the signing of the underwriting agreement
and expiring 180 calendar days following the settlement and
delivery date of the New Shares, subject to certain exceptions.
The French State, the Dutch State, China Eastern
Airlines and Delta Airlines have entered into a lock-up agreement
from the approval of the Prospectus by the AMF and until the
expiration of a period of 90 calendar days following the date of
settlement and delivery of the New Shares, subject to certain
exceptions.
CMA CGM has agreed with the Company on a lock-up
commitment as from the settlement-delivery of the New Shares until
the expiry of a three-year period following this date, being
specified that CMA CGM may sell a maximum of 50% of the shares
acquired in the context of the Rights Issue during an additional
three-year period. This lock-up commitment will be terminated early
if a firm and complete cooperation agreement in relation to air
cargo is not concluded before December 1st 2022 or if such an
agreement is terminated.
In addition, CMA CGM committed to a 10-year
period to not acquire or subscribe to any shares issued by the
Company, unless such acquisition does not lead to an increase of
its stake in the share capital of the Company, subject to certain
exceptions. The undertaking specifies that at the end of a period
of 5 years from the settlement-delivery of the New Shares, the
Board of Directors of the Company may modify this undertaking in
order to allow CMA CGM to increase its shareholding in the
Company.
Moreover, the major shareholders of Air
France-KLM will support a resolution for the appointment of a
representative of CMA CGM to the Board of Directors of Air
France-KLM at the general shareholders' meeting to be held
today.
Dilution
For illustrative purposes only, a shareholder
holding 1% of the Company’s share capital as of 24 May 2022, and
not subscribing to the Rights Issue, would hold 0.25% of the
Company’s share capital on a non-diluted basis following the Rights
Issue.
Underwriting
The Rights Issue was subject to an underwriting
agreement (the “Underwriting Agreement”) entered
into on 23 May 2022 between the Company and a syndicate of banks
including Deutsche Bank, HSBC, Natixis, Crédit Agricole Corporate
and Investment Bank and Société Générale acting as Joint Global
Coordinators, Lead Managers and Joint Bookrunners (the
“Joint Global Coordinators”), ABN AMRO Bank N.V.,
Banco Santander, S.A., Citigroup and Coöperatieve Rabobank U.A
acting as Joint Bookrunners (the “Joint
Bookrunners”), Crédit Industriel et Commercial S.A., MUFG
Securities (Europe) N.V. and SMBC Bank EU AG acting as co-lead
managers (the “Co-Lead Managers”, and together
with the Joint Global Coordinators and the Joint Bookrunners, the
“Underwriters”). Under the terms of this
Underwriting Agreement, the Underwriters have undertaken, jointly
and without joint and several liability, to subscribe for New
Shares not subscribed for at the end of the subscription period, in
such a way that the Capital Increase, after taking into account the
Subscription Commitments, (on an irreducible basis only), in cash
up to a total amount of 359,923,918.77 euros, which represent
15.96% of the proposed issuance, is subscribed for in full. This
agreement does not constitute a performance guarantee within the
meaning of article L.225-145 of the French Commercial Code. This
agreement may be terminated by the Global Coordinators on behalf of
the Underwriters up to (and including) the settlement-delivery
date, subject to certain conditions and in certain circumstances,
in particular in the event of inaccuracy of the representations and
warranties, failure by the Company to comply with one of its
undertakings, non-fulfillment of the usual conditions precedent, a
significant unfavorable change in the situation of the Company and
its subsidiaries or the occurrence of national or international
events. In the event of termination of the Underwriting Agreement
in accordance with its provisions, the Rights Issue will then be
cancelled.
Indicative timetable of the
Rights Issue
The Rights will be detached on 25 May 2022 and
traded on the regulated markets of Euronext in Paris
(“Euronext Paris”) under the ISIN code
FR0014008ZE6 from 25 May 2022 until 7 June 2022 inclusive.
Unexercised Rights will automatically lapse at the end of the
subscription period, i.e., 9 June 2022 at the close of trading. The
subscription period for the New Shares will run from 27 May 2022
until the close of trading on 9 June 2022. Results of the rights
issue will be announced on 14 June 2022.
Settlement and delivery of the New Shares and
commencement of trading on Euronext Paris and Euronext Amsterdam
are expected to take place on 16 June 2022. The New Shares will
immediately entitle their holders to receive dividends declared by
the Company as from the date of issuance. They will be fully
fungible with the Company’s existing shares of the Company and will
be traded on the same trading line under the same ISIN code
FR0000031122.
Risk factors
Potential investors are also advised to consider
carefully the risk factors described in chapter 3.1 “Risk factors”
of the 2021 Universal Registration Document and chapter 2 “Risk
factors” of the Securities Note. Should all or any part of these
risk factors materialize, the Company’s businesses, financials,
results or ability to reach its guidance may be negatively affected
and the value of the Company’s shares may also be affected.
Availability of the
Prospectus
The prospectus (the
“Prospectus”) was approved by the French Autorité
des marchés financiers (the “AMF”) under number
D.22-0236-A01 on 23 May 2022 and includes (i) the 2021 universal
registration document (document d’enregistrement universel) of the
Company filed with the AMF on 4 April 2022 under number D.22-0236
(the “2021 Universal
Registration Document”), the amendment to the 2021
universal registration document filed with the AMF on 23 May 2022
under number D.22-0236-A01, (iii) the securities note (note
d’opération) dated 23 May 2022 (the “Securities
Note”), and (iv) the summary of the Prospectus (included
in the Securities Note).
The Prospectus is available on the websites of
the AMF (www.amf-france.org) and the Company (www.
airfranceklm.com). 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.
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.
A conference call hosted by Mr. Smith (CEO) and
Mr. Zaat (CFO) will be held on May 24, 2022 at 08.15 am CET.
To connect to the conference call, please dial:
France: Local +33 (0)1 70 73 03 39Netherlands: Local +31 (0)20 703
8218UK: Local +44 (0)330 165 4012US: Local +1 323-701-0160
Confirmation code: 1131773
Investor
Relations
Frédéric
Kahane
Michiel
Klinkers
33 1 49 89 52 59
+33
1 49 89 52 60
frkahane@airfranceklm.com
michiel.klinkers@klm.com
Website: www.airfranceklm.com
IMPORTANT INFORMATION
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) and the United Kingdom
(each a “Relevant 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 State. As a result, the securities may and will be offered
in any Relevant State only (i) to qualified investors within the
meaning of the Prospectus Regulation, for any investor in a Member
State of the European Economic Area, or Regulation (EU) 2017/1129
as part of national law under the European Union (Withdrawal) Act
2018 (the “UK Prospectus Regulation”), for any investor in the
United Kingdom, (ii) to fewer than 150 individuals or legal
entities (other than qualified investors as defined in the
Prospectus Regulation or the UK Prospectus Regulation, as the case
may be), or (iii) 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
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 of America
(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 of
America. 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 of America, and may not be
offered or sold in the United States of America 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 of America under
the Securities Act or to conduct a public offering of the
securities in the United States of America.
This announcement may not be published,
forwarded or distributed, directly or indirectly, in the United
States of America, Canada, Australia, South Africa, or Japan.
- Press release Air France-KLM launches a €2.256 billion rights
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