Alitalia board of directors approves Air France KLM exchange offer

Air France- KLM submitted a proposal to Alitalia on March 14th, aimed at combining Alitalia and the Air France-KLM Group and acquiring the control of the Italian company. Air France-KLM released that Alitalia board of directors approved unanimously its proposal on March 16th. Such proposal foresees a share exchange offer on Alitalia shares and a cash offer on Alitalia bonds.

Air France-KLM’s offer, conditional on a number of elements, is based on an industrial plan providing for the restructuring and re-launch of Alitalia. It calls for a network 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.

Its membership of the Air France-KLM Group together with the implementation of the plan should enable Alitalia to return to operating profit as early as 2009 and to rapidly move to operating margin levels in line with those of other major European airline companies.

Air France-KLM is proposing to acquire 100% of the capital of Alitalia via an exchange offer with a parity of 1 Air France-KLM share for 160 Alitalia shares, equivalent to 8.7 million Air France-KLM shares for 100pet of Alitalia. The group also proposes to acquire the convertible bonds issued by Alitalia at their current market value of 0.3145 euro per bond, or a total of 608 million euro.

Lastly, Air France-KLM undertakes to underwrite fully a capital increase for a total of 1 billion euro, which will be launched immediately after the closing of the offer and open to all the shareholders of Alitalia. The proceeds of this significant capital increase will be largely directed towards funding the commercial re-launch of Alitalia.

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