KLM has announced it has secured EUR 3.4 billion in financing to help weather the COVID-19 crisis, the company said.
KLM has already taken a large number of measures to maintain liquidity shortly after the outbreak. Nevertheless, KLM needs additional financing in the coming period. This has been the subject of intensive discussions with the Dutch state and banks in recent months.
KLM said with the financing package, it can continue to fulfill its important social role in economic recovery and sustainability. In the coming period, KLM will be working on the restoration of the route network and on the development of the restructuring plan and the far-reaching conditions that have been imposed on the package.
After discussions with both the Dutch state and banks, KLM has agreed on the structure of a financing package to ensure liquidity. The financing package and the conditions under which this package is provided by the Dutch state are subject to parliamentary approval in the Netherlands. The financing package should also be approved by the European Commission under the Temporary Framework for State aid measures introduced in the context of COVID-19.
Once this approval has been obtained, KLM will consult with trade unions to work out and detail together the conditions that the government imposes on the employment conditions of KLM employees.
The financing package consists of:
-A 90% State guaranteed revolving credit facility of EUR 2.4 billion with a maturity of 5 years. The facility is granted by 11 banks, of which three Dutch banks and eight foreign banks.
-A direct State loan of EUR 1 billion with a maturity of 5.5 years. The loan, provided by the Dutch State, will be subordinated to the revolving credit facility.
-Following the completion of the parliamentary process, the first EUR 665 million drawing under the new revolving credit facility will be used to repay and terminate the existing revolving credit facility drawn on 19 March 2020. At that time, KLM will also withdraw a pro rata amount (EUR 277 million) from the direct State loan. Follow-up withdrawals under both the revolving credit facility and the direct State loan are only possible if certain conditions imposed by the State are met.
KLM will draw up a restructuring plan that meets these conditions and determines the path for post-COVID-19 recovery. The plan also aims to review KLM´s current activities and adapt KLM to the changed economic reality.
The syndicated revolving credit facility was coordinated by the three Dutch banks: ABN, ING and Rabobank. KLM received financial advice from Rabobank and legal advice from Allen & Overy LLP.