KLM announced on Friday that they have secured €3.4 billion in new financing to secure their future as the weather the global COVID-19 pandemic. The financing included a direct state loan of €1 billion and a 90% State guaranteed €2.4 billion revolving credit facility.
Today, KLM Royal Dutch Airlines announced that they have secured €3.4 billion in new financing to help the carrier weather the global COVID-19 pandemic-related industry downturn. The financing package includes a direct Dutch State loan of €1 billion as well as a 90 percent State guaranteed revolving credit facility of €2.4 billion from a consortium of three Dutch and eight foreign banks. The direct state loan has a maturity of five and a half years and the revolving credit facility has a maturity of five years. Upon closing, the first €665 million of the revolving credit facility will be drawn down to terminate and repay an existing revolving credit facility drawn on March 19, 2020. In Friday’s announcement, KLM’s CEO Pieter Elbers said,
“Due to the COVID-19 KLM is currently in an unprecedented crisis. The financing package is necessary to secure the long and difficult road to recovery in the coming period. This is a very important step and I express my gratitude on behalf of all KLM colleagues and the Dutch State and the banks for their confidence in our organization and future. With the financing package, KLM can continue to fulfill its important social role 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 development of the restructuring plan and the far-reaching conditions that have been imposed on the package.
The direct state loan of €1 billion includes an annual payable coupon at a rate equal to EURIBOR 12 months (floored to zero) plus a 6.25% margin for year one, increasing to 6.75% for years 2-3 and 7.75% for years 4-5. The revolving credit facility includes an annual coupon payable at a rate equal to EURIBOR (floored at zero) plus a 1.35% margin as well as a cost guarantee granted by the Dutch State equal to .50% in the first year, 1.00% in years 2-3 and 2.00% thereafter. The three Dutch banks participating in the syndicated revolving credit facility include ABN, ING and Rabobank and the company received financial advice from Rabobank along with legal advice from Allen and Overy LLP.
Source: KLM Royal Dutch Airlines