Lufthansa, battered by the Corona crisis, has found fresh money on the capital market and wants to repay part of its state aid early. The airline raised 1.6 billion euros by issuing a bond. The associated emissions program for 4 billion euros dates back to November 2020.
Karsten Wöckener
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With the income and borrowing of 2.1 billion euros last year, Lufthansa has now ensured the refinancing of all financial liabilities of around 2.6 billion euros due this year, it says. As agreed, the borrowing of additional funds leads to the repayment of the loan that Lufthansa had received from the KfW development bank during the Corona crisis.
After repayment, the group could freely dispose of the aircraft pledged to secure the loan. The two tranches of the current bond are intended for institutional investors and have terms until 2025 and 2028. The lead banks are Barclays Bank, Bank of America, JPMorgan and Société Générale.
“Despite the repayment, however, it is likely that we will make use of other elements of the stabilization package that are currently unused,” said Lufthansa CFO Remco Steenbergen. To what extent depends on the further course of the pandemic.
The governments of Germany, Austria, Switzerland and Belgium supported Lufthansa with a nine billion euro aid package last summer because air traffic collapsed during the pandemic. As of September 30, the airline had cash and cash equivalents of 10.1 billion euros. By then, Lufthansa had drawn almost 3 billion euros from the aid package. Among the so far not used funds is a silent participation of the economic stabilization fund of 4.5 billion euros.
Hendrik Haag
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Adviser to Lufthansa
White & Case (Frankfurt): Karsten Wöckener (capital market law) – known from the market
Adviser to banks
Hengeler Mueller (Frankfurt): Dr. Hendrik Haag (lead); Associate: Raik Petermann (both capital markets law)
Background: White & Case is a consultant for the Lufthansa issuance program. Obviously, the current bonds are not simply derived from the program, but require separate advice due to government support. It is well known in the market that White & Case partner Dr. Alexander Kiefner has repeatedly advised Lufthansa on capital market law issues.
As far as is known, the in-house department of the airline around General Counsel Dr. Stephan Zilles a number of law firms on the aid package. Hengeler plays a key role in the complex. In addition to client relation partner Dr. Daniel Kress, the law firm’s capital market and financing experts are in great demand. State aid law is also an important part. Hengeler also advised the company on a loan from the KfW syndicate facility, in which Deutsche Bank participated.
The capital increase including the takeover of shares by a fund of the finance agency comes together at Hengeler. In this respect it is obvious that the banks have now also commissioned Hengeler and their partner Haag in this case. Both Hengeler’s and Haag’s bond practice are among the leading advisors on the German market. (Ludger Steckelbach; with material from dpa)
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