By Mary-Katherine Stinson
Lexington, Ky., July 14 – Air France-KLM and Apollo Global Management, Inc. signed a definitive agreement for a €500 million quasi-equity financing for Air France’s engineering and maintenance (MRO) components activity, according to a press release.
The agreement stipulates that Apollo-managed funds and entities will raise a €500 million financing into an operating affiliate of Air France that will own a pool of components dedicated to Air France’s engineering and maintenance activities.
Under the agreement, Apollo will subscribe to perpetual bonds issued by the ad hoc operating affiliate, bearing interest initially at 6.9% with gradual step-ups and caps applied after the first three years.
Air France will have the ability to redeem the perpetuals at any time after three years.
The financing is subject to customary closing conditions.
Deutsche Bank AG and Skadden, Arps, Slate, Meagher & Flom LLP are acting as exclusive financial and legal advisers to Air France-KLM. Milbank LLP and Jeantet are acting as legal advisers to the Apollo funds. Apollo Capital Solutions provided structuring and syndication services.
The financing’s proceeds will be allocated to general corporate purposes and support future components expenditures related to maintenance activity.
The transaction is part of the group's overall IFRS equity restoration plan, as announced in February. It will not cause any changes in the ownership, operational and social aspects of Air France’s engineering and maintenance activity.
The airline is based in Tremblay-en-France, France.
| Issuer: | Air France-KLM
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| Amount: | €500 million
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| Maturity: | Perpetual
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| Financial adviser: | Deutsche Bank AG
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| Counsel to issuer: | Skadden, Arps, Slate, Meagher & Flom LLP
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| Counsel to funds: | Milbank LLP and Jeantet
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| Coupon: | 6.9% initially, with gradual step-ups and caps after three years
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| Call features: | After three years
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| Distribution: | Private placement
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