Fact Box: Italian carrier accepts offer
ROME: The board of the Italian airline Alitalia accepted a takeover offer early on Sunday from Air France-KLM.
Following are details of the offer:
SHARES
One Air France-KLM share for every 160 Alitalia shares
Offer covers 100 percent of Alitalia shares
Air France-KLM to issue 8.7 million new shares
Offer conditional on 49.9 percent acceptances before the exercise of convertible bonds or 62 percent when fully diluted.
BONDS Air France-KLM to acquire the 2010 convertible bonds issued by Alitalia at their Mar. 14 closing market value of 0.3145 euro per bond for a total of \608 million.
CAPITAL INCREASE
Air France-KLM to underwrite fully a \1 billion capital increase to be launched immediately after the closing of the offer and open to all the shareholders of Alitalia and all holders of convertible bonds.
Proceeds to be used for commercial re-launch of Alitalia.
INDUSTRIAL PLAN
Plan foresees an initial phase of restructuring followed by development including fleet renewal from 2010.
Alitalia reaffirms an initial 2008-2010 three-year “transition and survival” plan drawn up on a stand-alone basis before it began negotiating with Air France-KLM.
Network to be organized around the international and intercontinental hub of Rome-Fiumicino, the center for domestic Italian routes, and around European and selected inter-continental destinations operating from Milan. Alitalia to maintain its own brand, remain part of SkyTeam.
Only part of ground-handling unit AZ Servizi to be transferred to Air France-KLM.
Flights linking Italy to India and China to be considered for reopening.
TARGET
Alitalia says the stand-alone 2008 to 2010 plan forecasts a return to operating profit in 2010.
Air France-KLM says its plans foresee a return to operating profit as early as 2009 and a rapid move to operating margin levels in line with those of other major European airlines.
Savings from the integration to allow Alitalias operating profit margins to rise to those enjoyed by major European carriers over the medium to long-term.
SHORT-TERM FUNDING
Italian government to provide a credit line to keep the airline flying pending completion of the deal, reimbursable as soon as it closes.
CONDITIONS
Endorsement of Italian finance ministry and its undertaking to tender its shares and bonds.
Italian government must not make any formal decision or statements which are strongly contrary to the deal.
Formal agreement of the unions at both Alitalia and AZ Servizi and undertakings to co-operate fully during the relaunch of the airline.
Air France-KLM says it is “relying on the commitment of all the employees, which will be crucial to the successful relaunch of the company”.
Guarantees that Alitalia can keep its slots.
Guarantees over services provided by Aeroporti di Roma.
A legal solution freeing Alitalia from risk in a dispute with SEA Handling at Malpensa airport in Milan.
Alitalia says the conditions must be assessed by March 31.
APPROVALS
Approval by the European Commission and competition authorities, expected by the end of the first half of 2008.
GUARANTEES
Air France-KLM gives certain assurances on future of Alitalia for five years, subject to continued slot availability.
GOVERNANCE
Air France-KLM to create a new Italian-held board seat.
Air France-KLM will not sell part of Alitalia for three years.
Alitalia to keep headquarters and operating base in Italy.
Air France-KLM ready to consider adding “Alitalia” to its name at a later date once it has 100 percent control.
FLEET
Alitalia fleet (excluding its Volare affiliate) will comprise 137 aircraft including 20 long-range planes in 2010.
From 2011, it says it will start to operate new-generation aircraft and envisages the replacement of its entire Boeing 767 fleet by 2016 and its MD80 fleet by 2020.
