Shipping group CMA CGM is seeking to raise around 325 million euros ($378.3 million) by issuing a three-year bond, which it will be able to reimburse with its shares in Air France-KLM, CMA CGM said on Tuesday.
CMA CGM will also have the possibility of repaying the bond in cash, or through a mix of cash and Air France-KLM shares, it added.
Shares in the airline group fell around 9% in early trade as investors planning to buy CMA CGM’s bonds hedged the equity portion they might receive in three years, according to ODDO BHF analyst Yan Derocles.
SHIPPING GROUP AN AIR FRANCE-KLM SHAREHOLDER SINCE 2022
CMA CGM holds 8.8% of Air France-KLM’s capital after becoming a shareholder in 2022 when it formed an air freight partnership with the airline.
The companies scrapped the cargo partnership in early 2024, and a lock-up on CMA CGM’s stake ended in February this year.
“CMA CGM remains a shareholder of Air France-KLM, confident in its management team, and further retains upside potential in Air France-KLM’s share price,” CMA CGM’s Chief Financial Officer Ramon Fernandez said in the statement.
“CMA CGM is issuing this exchangeable bond that it views as a cost-efficient financing allowing the group to diversify its funding sources,” he said.
REIMBURSEMENT TO REPRESENT 30-35% PREMIUM OVER CURRENT SHARE PRICE
Under the proposed bond, a reimbursement through Air France-KLM shares will represent a premium of between 30% and 35% over the average price of the shares on December 9, CMA CGM said.
The premium “is testament to CMA CGM’s trust in Air France-KLM’s strategy and in the group’s long-term potential”, the airline group said in a statement.
“At this stage, this decision will not have any impact on Air France-KLM’s capital structure,” it added.
CMA CGM, the world’s third-largest container shipping line, has continued to invest in its own air cargo division and extend its footprint in land logistics through its CEVA subsidiary.
