Air France-KLM on Wednesday 16 November raised just over €300 million by issuing subordinated bonds convertible into stock, seeking to strengthen its capital and pay back state aid but sending its shares plummeting.
Details
The shares plunged 13% shortly before the market close due to investor concerns about potential dilution for current shareholders.
Air France said in February that it was considering options for raising of up to 4 billion euros of capital, including a rights issue and quasi-equity debt issues. The operation on Wednesday 16 November is part of that plan.
"This transaction marks a further step in the group's initiatives to accelerate the repayment of French state aid, continue to strengthen equity capital and help optimise financial costs," the company said in a statement.
The bonds, which can be exchanged into existing Air France shares as well as converted into new shares, were offered through a placement to qualified investors, the airline said.
Holders can convert the bonds into stock over a 10-day period that begins 40 calendar days after the issue date under a specific formula, the company said.
In later statements, it said bookrunners had received demand indications "well above" the €300 million nominal value, saying the issue was "multiple times" oversubscribed.
Major shareholder CMA CGM, a shipping company, participated in the issue pro rata to its 9% equity stake in the company, Air France said in a statement.
The maximum potential dilution will be equal to approximately 7.8% of outstanding share capital, the airline added.
Air France-KLM received €10.4 billion in support in 2020 when the coronavirus pandemic hit, including through direct state loans from France and the Netherlands - its two biggest shareholders at the time.
Neither the French nor the Dutch state was taking part in the bond issuance, according to Dutch Finance Minister Sigrid Kaag.
"The company is not aware of any subscription intention from its other main shareholders," Air France said.
France has a 28.6 % stake in the airline.
Letter To Parliament
In a letter to parliament, Kaag said that the Dutch state's own holding of 9.34% would be diluted to 8.66% if the new bonds are converted into shares.
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