Air France-KLM is hoping to raise €480 to €550 million ($621 to $711 million) through a bonds issue that will be used for fleet and debt financing.
The Franco-Dutch group launched the convertible bonds private placement on Wednesday and is expecting to wrap up the process by March 28. Initially, €480 million worth of bonds will be offered, although this could be extended by 15% to approximately €550 million.
“The proceeds of the issuance will be used for the group’s general corporate purposes, notably to finance its fleet and allow for the optimization of its debt repayment schedule,” Air France-KLM said in a statement, adding that 60% of the funding will be channeled into Air France, while the remaining 40% will go to KLM.
Air France-KLM is planning to invest €1.2 billion during the 2013 financial year and it also has €1.3 billion of debt falling due this year.
Existing shareholders have first call on the bonds issue, prorated according to their existing shareholding. “The French State has decided to subscribe to this issue during the priority subscription period up to its current 15.9% stake in Air France-KLM's share capital,” the group said.
Recently, Air France-KLM announced a widening of its full-year net losses from €809 million to €1.2 billion. This triggered an intensification of its cost-cutting plans.