Air France-KLM drops more than 10% after the announcement of a debt issuance

The announcement of a bond issue in shares for an amount of 300 million euros caused the share of the airline group to collapse.

The share of airline group Air France-KLM fell more than 10% on Wednesday on the Paris Stock Exchange after the announcement of an issue of convertible bonds in the amount of 300 million euros. The stock lost 10.69% to 1.25 euros at 9:25 am. The airline Air France is also threatened by a flight crew strike during the Christmas holidays. If the bonds were finally converted into equity, they would mechanically lower the proportion of current shareholders who would not participate in the debt issuance, such as during a capital increase, which typically weighs on the stock price.

On the Paris Stock Exchange, the stock lost 11.51% to 1.24 euros at around 12:05 in a market down 0.36%, even against the backdrop of the threat of a strike during the end-of-year holiday period , crucial for the Two Air France flight crew unions have filed a notice for the period from December 22 to January 2, it was learned on Wednesday, as negotiations on a collective agreement for hostesses and stewards are underway. Debt issuancemarks a new stage in the group’s efforts to accelerate the repayment of French state aid, continue to support capital strengthening and help optimize financial costs“, explains the company.

The reluctant French state

The two public shareholders of the group, including the French state, leading with 28.6% of the capital, will not participate in the fundraising. It concerns “very specific tools” Which ones are they “mainly with specialized investors rather than with shareholdersthe French economy ministry told AFP. To the extent that “where this issue aims to repay the aid granted by the state in spring 2021, the state did not want to participateBercy added. “Participation in the issuance of this instrument is not necessary to safeguard Dutch public interestsThis was stated by Dutch Finance Minister Sigrid Kaag in a letter sent to the Hague parliament. If the bonds have been converted, the participation of the Dutch state”would decrease from 9.3% to 8.7%and voting rights would drop from 10.8% to 10%, according to the document published on the government website.

The Dutch state still remains a major shareholder in the company and the current position on information and involvement in the company’s decision-making is maintained.“, explains Ms Kaag. The shipowner CMA CGM, third shareholder with currently 9% of the capital, has “expressed the intention“to participate in the placement”in proportion to its current holding“, according to Air France.

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