AFLYY Air France ADS (PK)

By Olivia Bugault

--Air France-KLM launches $1.18 billion capital increase for French arm

--The French state will participate for a maximum amount of EUR650.8 million

--China Eastern Airlines is also subscribing to the capital increase

Air France-KLM said late Monday that it has launched a planned capital increase of around 988 million euros ($1.18 billion) and that the net proceeds will be used to strengthen the balance sheet and liquidity of its French arm.

The Franco-Dutch carrier said it will issue 186 million new shares at a price of between EUR4.84 and EUR5.31 a share, and that the capital raise for Air France could be up to EUR1.14 billion in the event that the increase option is exercised in full.

The French state --which holds a 14.3% stake in Air France-KLM-- will subscribe for up to 65.9% of the capital increase, or up to EUR650.8 million, and won't hold more than 29.9% of the company's share capital once the capital increase is completed, the airline said. China Eastern Airlines, which holds a 8.8% stake in the airline, will participate to the capital increase but will keep its stake under 10%, it said.

"The subscription commitments total approximately EUR777.9 million and represent approximately 78.7% of the amount of the capital increase," it said.

The Dutch state won't participate in the capital increase.

The launch comes after EUR4 billion in state aid to recapitalize Air France was approved by the European Commission last week that also includes the conversion of a EUR3 billion French state loan into a perpetual hybrid bonds instrument.

In a separate statement late Monday, Air France-KLM said it was strengthening its collaboration with China Eastern Airlines. The airlines will expand their commercial collaboration and increase their operations between Beijing and Europe through their joint venture, it said.

Write to Olivia Bugault at olivia.bugault@wsj.com

(END) Dow Jones Newswires

April 13, 2021 02:53 ET (06:53 GMT)

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