Air France raises E300m with convertible bond issue

Air France-KLM on Wednesday raised just over E300m by issuing subordinated bonds convertible into stock, seeking to strengthen its capital and pay back state aid but sending its shares plummeting. The shares plunged 13% shortly before the market close due to investor concerns about potential dilution for current shareholders. Air France said in February that it was considering options for raising of up to 4 billion euros of capital, including a rights issue and quasi-equity debt issues. The operation on Wednesday is part of that plan. "This transaction marks a further step in the group's initiatives to accelerate the repayment of French state aid, continue to strengthen equity capital and help optimise financial costs," the company said. The bonds, which can be exchanged into existing Air France shares as well as converted into new shares, were offered through a placement to qualified investors, the airline said. Holders can convert the bonds into stock over a 10-day period that begins 40 calendar days after the issue date under a specific formula, the company said.<br/>