Air France-KLM seeks to raise $2.4 billion in new equity issue – Expat Guide to the Netherlands

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Air France-KLM on Tuesday announced an offer to raise 2.26 billion euros ($2.4 billion) by issuing new shares, as the debt-ridden company seeks to put the coronavirus crisis that has ravaged its finances behind her.

The Covid-19 pandemic cost the Franco-Dutch airline some 11 billion euros ($11.7 billion) over two years, after travel was halted.

The airline has a debt of some 7.7 billion euros despite massive bailouts from the French and Dutch governments, which hold minority stakes in the former airlines which merged in 2004.

The company’s shares fell 5.41% on Tuesday morning to 4.11 euros per share after the announcement.

The French and Dutch governments will participate in the latest funding round and will retain the same percentage of shares, the airline said.

The French State is the main shareholder with 28.6%, while the Netherlands holds 9.3%.

But two other reference shareholders, the Chinese China Eastern and the American Delta Air Lines will see their stake reduced in favor of a new player, the French shipping giant CMA CGM.

China Eastern will see its share fall from 9.6% to 4.7% and Delta from 5.8% to 2.9%.

CMA CGM, based in the Mediterranean port city of Marseille, will invest up to 400 million euros, Air France-KLM said in a statement.

The French shipping company announced last week that it would increase its stake to nine percent.

This would make CMA CGM the third shareholder in the financing round which begins on Wednesday and ends on June 9 and is proceeding as planned.

The main objective of the planned capital increase is to repay the aid granted by the French State.

In the first recapitalization operation, the French government agreed to convert three billion euros of loans into Air France-KLM perpetual hybrid bonds as they are considered a form of capital.

The European Commission has given the green light to the aid, which has seen France’s share double, as part of the exceptional measures taken to support businesses during the health crisis.

But the company was forced to make concessions, including giving up slots at Orly, Paris’ second airport after Charles de Gaulle.

The airline, which plans to hold a general meeting with shareholders later on Tuesday, announced last week that 500 million euros from US private equity firm Apollo would go towards reimbursement by the French state.

Apollo plans to invest in the company’s subsidiary which owns a fleet of Air France spare engines.

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