KLM secures financing of EUR 3.4 billion to weather the COVID-19 crisis

Amstelveen – WEBWIRE

KLM announces that it has secured financing for a complete quantity of EUR 3.4 billion.

COVID-19 has triggered aviation to pretty much arrive to a standstill worldwide in new months. The pandemic has an unprecedented affect on KLM Group’s things to do. In get to cope with this difficult period of time and to protected the long run of the organization, KLM has previously taken a significant selection of measures to preserve liquidity soon just after the outbreak. However, KLM requires more financing in the coming period of time. This has been the subject of intensive discussions with the Dutch state and banking institutions in new months.

“Owing to COVID-19 KLM is currently in an unprecedented crisis. The financing deal is important to protected the extensive and difficult road of recovery in the coming period of time. This is a quite vital action and I specific my gratitude on behalf of all KLM colleagues to the Dutch state and the banking institutions for their assurance in our organisation and our long run. With the financing deal, KLM can go on to fulfil its vital social function in economic recovery and sustainability. In the coming period of time, we will be operating on the restoration of the route network and, on the other hand, on the growth of the restructuring approach and the considerably-achieving problems that have been imposed on the deal.” KLM CEO Pieter Elbers

The financing makes sure that KLM can go on its things to do and that the company’s placement is strengthened in the direction of the long run. The problems imposed by the Dutch Condition on the financing deal relate to the total KLM Team and include phrases of employment of all KLM Team personnel, the variable remuneration of management and top management, restructuring, dividend, governance, network quality, sustainability and liveability.

Right after watchful discussions with the two the Dutch state and banking institutions, KLM has agreed on the composition of a financing deal to be certain liquidity. The financing deal and the problems underneath which this deal is offered by the Dutch state are subject to parliamentary acceptance in the Netherlands. The financing deal ought to also be authorized by the European Fee underneath the Short term Framework for Condition aid measures introduced in the context of COVID-19.

The moment this acceptance has been received, KLM will check with with trade unions to function out and depth jointly the problems that the federal government imposes on the employment problems of KLM personnel.

The financing deal is composed of:

  • A 90% Condition guaranteed revolving credit score facility of EUR two.4 billion with a maturity of 5 decades. The facility is granted by eleven banking institutions, of which a few Dutch banking institutions and 8 international banking institutions.
  • A direct Condition mortgage of EUR 1 billion with a maturity of 5.5 decades. The mortgage, offered by the Dutch Condition, will be subordinated to the revolving credit score facility.

Subsequent the completion of the parliamentary process, the first EUR 665 million drawing underneath the new revolving credit score facility will be made use of to repay and terminate the current revolving credit score facility drawn on 19 March 2020. At that time, KLM will also withdraw a professional rata quantity (EUR 277 million) from the direct Condition mortgage. Observe-up withdrawals underneath the two the revolving credit score facility and the direct Condition mortgage are only attainable if selected problems imposed by the Condition are fulfilled.

KLM will for that reason attract up a restructuring approach that meets these problems and establishes the route for submit-COVID-19 recovery. The approach also aims to evaluation KLM’s latest things to do and adapt KLM to the modified economic truth.

Further information and facts on the financing deal

Revolving credit score facility

  • A revolving credit score facility of EUR two.4 billion, granted by eleven banking institutions, of which a few Dutch banking institutions and 8 intercontinental banking institutions.
  • The main options include:
    1. 90% promise granted by the Dutch state
    2. Maturity of 5 decades
    3. Coupon at an once-a-year fee equal to EURIBOR (floored at zero) plus a margin of 1.35%
    4. A charge of promise granted by the Dutch state equal to .fifty% in 12 months 1, 1.00% in 12 months two and 3, and two.00% just after 12 months 3

Immediate state mortgage

  • A direct time period mortgage of EUR 1. billion, granted by the Dutch state to KLM.
  • The main options include:
    1. Maturity of 5.5 decades
    2. Coupon payable yearly at a fee equal to EURIBOR 12 months (floored at zero) plus a margin of 6.twenty five% for 12 months 1, 6.75% for 12 months two and 3, and 7.75% for 12 months 4 and 5
    3. Subordination to the new revolving credit score facility

The revolving credit score facility and the direct mortgage will be drawn on a professional rata foundation. KLM’s first drawing underneath the new revolving credit score facility will be made use of to repay and terminate the current revolving credit score facility drawn on 19 March 2020 for an quantity of 665 million euros. At that time, KLM will also withdraw a professional rata quantity from the direct Condition mortgage. Observe-up withdrawals underneath the two the revolving credit score facility and the direct Condition mortgage are only attainable if selected problems imposed by the Condition are fulfilled.

The syndicated revolving credit score facility was coordinated by the a few Dutch banking institutions: ABN, ING and Rabobank. KLM been given monetary guidance from Rabobank and lawful guidance from Allen & Overy LLP.

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