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

KLM announces that it has secured financing for a full quantity of EUR 3.four billion.

COVID-19 has caused aviation to nearly come to a standstill throughout the world in current months. The pandemic has an unparalleled impact on KLM Group’s pursuits. In buy to cope with this hard period and to safe the long term of the firm, KLM has now taken a large variety of steps to preserve liquidity shortly after the outbreak. Nevertheless, KLM desires supplemental financing in the coming period. This has been the topic of intense discussions with the Dutch condition and financial institutions in current months.

“Due to COVID-19 KLM is now in an unparalleled disaster. The financing bundle is required to safe the prolonged and hard highway of restoration in the coming period. This is a quite crucial stage and I convey my gratitude on behalf of all KLM colleagues to the Dutch condition and the financial institutions for their self-assurance in our organisation and our long term. With the financing bundle, KLM can continue on to fulfil its crucial social job in financial restoration and sustainability. In the coming period, we will be functioning on the restoration of the route network and, on the other hand, on the development of the restructuring system and the considerably-reaching ailments that have been imposed on the bundle.” KLM CEO Pieter Elbers

The financing ensures that KLM can continue on its pursuits and that the company’s posture is strengthened towards the long term. The ailments imposed by the Dutch Point out on the financing bundle relate to the overall KLM Team and consist of conditions of employment of all KLM Team staff, the variable remuneration of management and top rated management, restructuring, dividend, governance, network quality, sustainability and liveability.

Immediately after mindful discussions with each the Dutch condition and financial institutions, KLM has agreed on the composition of a financing bundle to guarantee liquidity. The financing bundle and the ailments less than which this bundle is provided by the Dutch condition are topic to parliamentary approval in the Netherlands. The financing bundle must also be authorised by the European Commission less than the Temporary Framework for Point out support steps launched in the context of COVID-19.

The moment this approval has been acquired, KLM will seek the advice of with trade unions to do the job out and depth together the ailments that the federal government imposes on the employment ailments of KLM staff.

The financing bundle is composed of:

• A 90{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9} Point out guaranteed revolving credit score facility of EUR two.four billion with a maturity of 5 years. The facility is granted by 11 financial institutions, of which a few Dutch financial institutions and 8 foreign financial institutions.

• A immediate Point out bank loan of EUR 1 billion with a maturity of 5.5 years. The bank loan, provided by the Dutch Point out, will be subordinated to the revolving credit score facility.

Subsequent the completion of the parliamentary process, the very first EUR 665 million drawing less than the new revolving credit score facility will be utilized 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 immediate Point out bank loan. Follow-up withdrawals less than each the revolving credit score facility and the immediate Point out bank loan are only doable if selected ailments imposed by the Point out are satisfied.

KLM will hence attract up a restructuring system that satisfies these ailments and establishes the route for post-COVID-19 restoration. The system also aims to evaluate KLM’s current pursuits and adapt KLM to the changed financial reality.

Further more information on the financing bundle

Revolving credit score facility

• A revolving credit score facility of EUR two.four billion, granted by 11 financial institutions, of which a few Dutch financial institutions and 8 intercontinental financial institutions.
• The major capabilities consist of:
  1. 90{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9} promise granted by the Dutch condition
  2. Maturity of 5 years
  3. Coupon at an once-a-year price equal to EURIBOR (floored at zero) in addition a margin of 1.35{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9}
  4. A expense of promise granted by the Dutch condition equal to .fifty{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9} in year 1, 1.00{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9} in year two and 3, and two.00{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9} after year 3

Immediate condition bank loan

• A immediate expression bank loan of EUR 1. billion, granted by the Dutch condition to KLM.
• The major capabilities consist of:
  1. Maturity of 5.5 years
  2. Coupon payable per year at a price equal to EURIBOR twelve months (floored at zero) in addition a margin of six.25{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9} for year 1, six.seventy five{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9} for year two and 3, and seven.seventy five{46dd52bca0123ad67b2d1222819e83fd0a56e45ca5068239f05f0c514f1e20f9} for year four and 5
  3. Subordination to the new revolving credit score facility

The revolving credit score facility and the immediate bank loan will be drawn on a professional rata basis. KLM’s very first drawing less than the new revolving credit score facility will be utilized 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 immediate Point out bank loan. Follow-up withdrawals less than each the revolving credit score facility and the immediate Point out bank loan are only doable if selected ailments imposed by the Point out are satisfied.

The syndicated revolving credit score facility was coordinated by the a few Dutch financial institutions: ABN, ING and Rabobank. KLM received economical suggestions from Rabobank and authorized suggestions from Allen & Overy LLP.

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