After careful 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 therefore 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.

Further information on the financing package

Revolving credit facility

• A revolving credit facility of EUR 2.4 billion, granted by 11 banks, of which three Dutch banks and eight international banks.
• The main features include:
  • 90% guarantee granted by the Dutch state
  • Maturity of 5 years
  • Coupon at an annual rate equal to EURIBOR (floored at zero) plus a margin of 1.35%
  • A cost of guarantee granted by the Dutch state equal to 0.50% in year 1, 1.00% in year 2 and 3, and 2.00% after year 3

Direct state loan

• A direct term loan of EUR 1.0 billion, granted by the Dutch state to KLM.
• The main features include:
  • Maturity of 5.5 years
  • Coupon payable annually at a rate equal to EURIBOR 12 months (floored at zero) plus a margin of 6.25% for year 1, 6.75% for year 2 and 3, and 7.75% for year 4 and 5
  • Subordination to the new revolving credit facility

The revolving credit facility and the direct loan will be drawn on a pro rata basis. KLM’s first drawing under the new revolving credit facility will be used to repay and terminate the existing revolving credit facility drawn on 19 March 2020 for an amount of 665 million euros. At that time, KLM will also withdraw a pro rata amount 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.

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.

The syndicate includes 12 leading banks. ABN AMRO and Rabobank acted as Coordinators. Bank of China, Bayerische Landesbank, Citigroup, Industrial and Commercial Bank of China and ING bank joined the transaction as Bookrunning Mandated Lead Arrangers. BNP Paribas, Crédit Agricole Corporate and Investment Bank, Groupe Crédit Mutuel-CIC, HSBC and Lloyds bank participated in this credit facility as Mandated Lead Arranger. Rabobank remains the Facility Agent.

The coordination in Air France-KLM Group financing is thus enhanced, which is beneficial for both Air France-KLM and its two airlines.