13/08/2020

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

Amstelveen – WEBWIRE – Friday, June 26, 2020 KLM announces that it has secured financing...

Amstelveen – WEBWIRE

KLM announces that it has secured financing for a overall amount of EUR 3.4 billion.

COVID-19 has triggered aviation to almost arrive to a standstill worldwide in latest months. The pandemic has an unprecedented effect on KLM Group’s actions. In order to cope with this tough interval and to protected the long run of the business, KLM has currently taken a big range of actions to maintain liquidity shortly soon after the outbreak. Even so, KLM requires additional financing in the coming interval. This has been the topic of intensive discussions with the Dutch state and banking institutions in latest months.

“Because of to COVID-19 KLM is at this time in an unprecedented disaster. The financing package is required to protected the very long and tough street of restoration in the coming interval. This is a incredibly vital move and I express my gratitude on behalf of all KLM colleagues to the Dutch state and the banking institutions for their self confidence in our organisation and our long run. With the financing package, KLM can keep on to fulfil its vital social role in financial restoration and sustainability. In the coming interval, we will be doing work on the restoration of the route community and, on the other hand, on the development of the restructuring strategy and the considerably-achieving ailments that have been imposed on the package.” KLM CEO Pieter Elbers

The financing guarantees that KLM can keep on its actions and that the company’s posture is strengthened towards the long run. The ailments imposed by the Dutch Condition on the financing package relate to the complete KLM Group and consist of terms of work of all KLM Group staff, the variable remuneration of management and major management, restructuring, dividend, governance, community top quality, sustainability and liveability.

Immediately after thorough discussions with each the Dutch state and banking institutions, KLM has agreed on the composition of a financing package to guarantee liquidity. The financing package and the ailments less than which this package is supplied by the Dutch state are topic to parliamentary approval in the Netherlands. The financing package must also be authorised by the European Commission less than the Non permanent Framework for Condition help actions introduced in the context of COVID-19.

After this approval has been obtained, KLM will seek the advice of with trade unions to get the job done out and depth with each other the ailments that the govt imposes on the work ailments of KLM staff.

The financing package consists of:

  • A ninety% Condition guaranteed revolving credit history facility of EUR 2.4 billion with a maturity of five many years. The facility is granted by eleven banking institutions, of which three Dutch banking institutions and 8 foreign banking institutions.
  • A immediate Condition mortgage of EUR 1 billion with a maturity of five.five many years. The mortgage, supplied by the Dutch Condition, will be subordinated to the revolving credit history facility.

Pursuing the completion of the parliamentary process, the 1st EUR 665 million drawing less than the new revolving credit history facility will be utilized to repay and terminate the current revolving credit history facility drawn on 19 March 2020. At that time, KLM will also withdraw a pro rata amount (EUR 277 million) from the immediate Condition mortgage. Adhere to-up withdrawals less than each the revolving credit history facility and the immediate Condition mortgage are only attainable if specific ailments imposed by the Condition are met.

KLM will for that reason draw up a restructuring strategy that meets these ailments and determines the path for post-COVID-19 restoration. The strategy also aims to evaluate KLM’s current actions and adapt KLM to the changed financial reality.

Further details on the financing package

Revolving credit history facility

  • A revolving credit history facility of EUR 2.4 billion, granted by eleven banking institutions, of which three Dutch banking institutions and 8 intercontinental banking institutions.
  • The principal options consist of:
    1. ninety% assurance granted by the Dutch state
    2. Maturity of five many years
    3. Coupon at an yearly charge equal to EURIBOR (floored at zero) as well as a margin of 1.35%
    4. A charge of assurance granted by the Dutch state equal to .fifty% in year 1, 1.00% in year 2 and 3, and 2.00% soon after year 3

Direct state mortgage

  • A immediate time period mortgage of EUR 1. billion, granted by the Dutch state to KLM.
  • The principal options consist of:
    1. Maturity of five.five many years
    2. Coupon payable yearly at a charge equal to EURIBOR twelve months (floored at zero) as well as a margin of six.25% for year 1, six.seventy five% for year 2 and 3, and seven.seventy five% for year 4 and five
    3. Subordination to the new revolving credit history facility

The revolving credit history facility and the immediate mortgage will be drawn on a pro rata basis. KLM’s 1st drawing less than the new revolving credit history facility will be utilized to repay and terminate the current revolving credit history facility drawn on 19 March 2020 for an amount of 665 million euros. At that time, KLM will also withdraw a pro rata amount from the immediate Condition mortgage. Adhere to-up withdrawals less than each the revolving credit history facility and the immediate Condition mortgage are only attainable if specific ailments imposed by the Condition are met.

The syndicated revolving credit history facility was coordinated by the three Dutch banking institutions: ABN, ING and Rabobank. KLM received economic suggestions from Rabobank and lawful suggestions from Allen & Overy LLP.

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