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

KLM announces that it has secured funding for a overall quantity of EUR three.4 billion.

COVID-19 has prompted aviation to practically arrive to a standstill worldwide in current months. The pandemic has an unparalleled affect on KLM Group’s functions. In order to cope with this tough period and to safe the foreseeable future of the company, KLM has now taken a massive number of measures to preserve liquidity soon after the outbreak. However, KLM requirements extra funding in the coming period. This has been the issue of intensive discussions with the Dutch condition and banking companies in current months.

“Owing to COVID-19 KLM is now in an unparalleled crisis. The funding deal is necessary to safe the extensive and tough road of recovery in the coming period. This is a quite vital phase and I categorical my gratitude on behalf of all KLM colleagues to the Dutch condition and the banking companies for their self-assurance in our organisation and our foreseeable future. With the funding deal, KLM can proceed to fulfil its vital social part in economic recovery and sustainability. In the coming period, we will be working on the restoration of the route network and, on the other hand, on the advancement of the restructuring approach and the considerably-achieving ailments that have been imposed on the deal.” KLM CEO Pieter Elbers

The funding makes sure that KLM can proceed its functions and that the company’s posture is strengthened towards the foreseeable future. The ailments imposed by the Dutch Point out on the funding deal relate to the total KLM Group and include things like conditions of employment of all KLM Group employees, the variable remuneration of management and leading management, restructuring, dividend, governance, network excellent, sustainability and liveability.

Immediately after careful discussions with each the Dutch condition and banking companies, KLM has agreed on the construction of a funding deal to assure liquidity. The funding deal and the ailments beneath which this deal is offered by the Dutch condition are issue to parliamentary approval in the Netherlands. The funding deal must also be authorised by the European Fee beneath the Temporary Framework for Point out help measures released in the context of COVID-19.

The moment this approval has been obtained, KLM will consult with trade unions to do the job out and element with each other the ailments that the government imposes on the employment ailments of KLM employees.

The funding deal is composed of:

• A 90% Point out certain revolving credit facility of EUR two.4 billion with a maturity of five yrs. The facility is granted by eleven banking companies, of which three Dutch banking companies and eight foreign banking companies.

• A immediate Point out personal loan of EUR 1 billion with a maturity of five.five yrs. The personal loan, offered by the Dutch Point out, will be subordinated to the revolving credit facility.

Following the completion of the parliamentary process, the initial EUR 665 million drawing beneath the new revolving credit facility will be applied to repay and terminate the existing revolving credit 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 personal loan. Observe-up withdrawals beneath each the revolving credit facility and the immediate Point out personal loan are only probable if sure ailments imposed by the Point out are achieved.

KLM will thus draw up a restructuring approach that fulfills these ailments and establishes the route for put up-COVID-19 recovery. The approach also aims to evaluate KLM’s latest functions and adapt KLM to the altered economic truth.

Even further details on the funding deal

Revolving credit facility

• A revolving credit facility of EUR two.4 billion, granted by eleven banking companies, of which three Dutch banking companies and eight international banking companies.
• The most important attributes include things like:
  1. 90% ensure granted by the Dutch condition
  2. Maturity of five yrs
  3. Coupon at an once-a-year level equivalent to EURIBOR (floored at zero) plus a margin of 1.35%
  4. A value of ensure granted by the Dutch condition equivalent to .50% in calendar year 1, 1.00% in calendar year two and three, and two.00% after calendar year three

Immediate condition personal loan

• A immediate time period personal loan of EUR 1. billion, granted by the Dutch condition to KLM.
• The most important attributes include things like:
  1. Maturity of five.five yrs
  2. Coupon payable on a yearly basis at a level equivalent to EURIBOR 12 months (floored at zero) plus a margin of six.25% for calendar year 1, six.seventy five% for calendar year two and three, and seven.seventy five% for calendar year 4 and five
  3. Subordination to the new revolving credit facility

The revolving credit facility and the immediate personal loan will be drawn on a professional rata basis. KLM’s initial drawing beneath the new revolving credit facility will be applied to repay and terminate the existing revolving credit 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 personal loan. Observe-up withdrawals beneath each the revolving credit facility and the immediate Point out personal loan are only probable if sure ailments imposed by the Point out are achieved.

The syndicated revolving credit facility was coordinated by the three Dutch banking companies: ABN, ING and Rabobank. KLM obtained monetary suggestions from Rabobank and lawful suggestions from Allen & Overy LLP.

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