Crédit Agricole, HSBC France and Natixis will serve as mandated lead arrangers and bookrunners for a €7 billion ($7.58 billion) financing arrangement for the Air France-KLM Group. The financing consists of a €4 billion ($4.33 billion) loan, which is 90% guaranteed by the French State, and a €3 billion ($3.25 billion) subordinated shareholder loan granted by the French State to Air France-KLM.
Natixis also will serve as documentation and facility agent for the financing. In addition, Deutsche Bank, Société Générale and Banco Santander will serve as senior mandated lead arrangers for the financing and BNP Paribas, Crédit Industriel et Commercial and Crédit Lyonnais will serve as mandated lead arrangers.
The main features of the €4 billion ($4.33 billion) loan include:
- An initial 12-month maturity, with a one-year or two-year extension option exercisable by Air France-KLM
- A coupon excluding the French State guarantee cost at an annual rate equal to EURIBOR (floored at zero) plus a margin of 0.75% in the first year, 1.50% in the second year and 2.75% in the third year
- A cost of the guarantee granted by the French State initially equal to 0.5% of the total amount of the loan, and which will step up to 1% for each of the second and third years
- A mandatory partial early repayment of 75% of the any net new money raised by Air France-KLM or Air France from financial institutions or through debt capital markets, subject to some exceptions
- A mandatory total early repayment notably in case of change of control of Air France-KLM or Air France
The subordinated shareholder loan includes:
- A bullet amount of €3 billion ($3.25 billion)
- A maturity of four years, with two consecutive one-year extension options exercisable by Air France-KLM
- A coupon payable annually or capitalizable at the discretion of Air France-KLM at a rate equal to EURIBOR 12 months (floored at zero) plus a margin of 7% for the first four years, 7.5% for the fifth and 7.75% for the sixth. This rate will be increased by 5.5% step up in case (i) the general assembly would not approve a capital increase proposed by the board of directors that would enable incorporation in the company’s shareholder equity of all or part of the outstanding shareholder loan, (ii) the general assembly would approve, without the approval from the French State, a capital increase which would not enable the incorporation of all or part the outstanding shareholder loan in the company’s shareholder equity or (iii) a third party, not acting in concert with the French State, would exceed, alone or in concert, the threshold of 20% of the capital of Air France-KLM
- Subordination to the French State guaranteed bank loan and, in the event of receivership or liquidation, to all the Air France-KLM senior bond and bank debt, without prejudice of an incorporation of all or part of the outstanding shareholder loan in the company’s shareholder equity
- Early repayment in the occurrence of certain events, such as the takeover of Air France-KLM and cases of default such as if the annual general meeting of shareholders does not ratify this shareholder loan according to article L.225-40 of the French Code de commerce or in case of acceleration of the French State guaranteed bank loan
Air France KLM will not pay dividends until these two loans have been repaid in full.
Consecutive to this financing, Air France KLM will reimburse €1.1 billion ($1.19 million) for the revolving credit facility drawn in March 2020 and will terminate it.