LONDON – European carrier Air France-KLM today announced that they have successfully completed its share capital increase with preferential subscription rights which was announced on 24th May 2022.
The carrier has announced that the capital increase has generated strong demand from existing and new investors for €2.6 billion.
Air France – KLM have further expressed that, both French and Dutch states have participated to the full extent of their rights to maintain their respective shareholdings unchanged, thus re-establishing their commitment and confidence in Air France-KLM’s performance.
With the new pattern changes in the shareholding, CMA CGM has become new strategic reference shareholder with 9% stake allocated in Air France-KLM share capital.
Speaking on this occasion, Benjamin Smith, CEO of Air France-KLM stated that, “ The success of our capital increase is a strong demonstration of the confidence that our existing shareholders and new investors have in the prospects of Air France-KLM.”
“This operation, which is part of a broader strategy to transform and streamline our Group, will allow us to emerge with a stronger balance sheet and increased strategic flexibility.”
“In a context of strong demand for travel, Air France-KLM will continue to implement its roadmap focused on increased profitability and sustainability, while meeting its customers’ expectations, fulfilling its CSR commitments and seizing the opportunities that will arise as the airline industry recovers.”
Allocation of the Share Capital Post Transaction
As the settlement and delivery of the Rights Issue for share capital has been concluded and the aggregated amount has reached 2,570,536,136 shares with a nominal face value of €1 each, the new shareholding structure has been reorganized as per the latest issued press release by the carrier.
The allocation of this newly share capital will be utilised for deeply subordinated bonds that were issued in April 2021 and are in custody of French state, and also will be utilised to strengthen carrier’s equity.
As per board resolution which took place in February 2022, with full-year financial results being discussed and displayed in the meeting, the Air France – KLM will be utilising new infusion of capital to free itself from the conditions set by the European Commission ahead of Covid-19 temporary framework.
As per that, the company will be spending €1.7 billion as the repayment of the ‘COVID-19 recapitalisation aid granted to the carrier in the form of ‘undated subordinated notes in April 2021.
This move will allow Air France – KLM to achieve €4 billion equity and quasi-equity issuance program designed to strengthen the balance sheet, which was also passed in board resolution meet in February 2022.
The expected performance recovery by the Air France – KLM has been put at a 7% to 8% operating margin targeted to be achieved by the year 2024, with no further dilutive measure needed.
Air France-KLM have also confirmed their objective to reduce its net debt ratio to 2.0x to 2.5x by year 2023.
Share Holding Pattern / Subscription
As the final allocation of share capital has been published by the Air France – KLM the following are the patterns that have been allocated.
As part of national carrier of France, the French state holds largest shareholding power with 28.6% of the company share capital and 28.1% of voting rights in the board, with irreducible extent of rights and corresponding to a subscription of 551,404,728 new shares.
Post new announcement, the shareholding pattern of French state remains unchanged.
The KLM being a national carrier of Netherlands, the Dutch state holds full extent of its rights, corresponding to a subscription of 180,000,000.
The shareholding pattern of Dutch state remains unchanged post new announcement.
CMA CGM, the new exclusive strategic partner for the cargo operations has a new reference shareholder status, with total shareholding amounting to 231,348,252 new shares, corresponding to 9% of the company share capital post new announcement.
Delta Air Lines and Chine eastern Airlines have participated in the Rights issue with cash-neutral basis with aggregating amount of €110.7 million with subscriptions of 35,873,772 and 58,763,343 new shares respectively post new announcement.
The cumulative shareholding percentage in the company for both carries have been aggregated to 2.9% and 4.7% respectively.
The remaining two shareholders are Fond Commun de Placement Enterprise (FCPE) and Stichting Piloten Anadelen Air France-KLM, who have been offered shareholding on cash neutral basis. FCPE has achieved this by part selling their right to CMA CGM.