July 18, 2022

Milbank Advises Apollo Global Management on Its €500M Investment Into an Ad Hoc Operating Affiliate of Air France


Milbank LLP represented Apollo Global Management (NYSE: APO) on its agreement with Air France-KLM for Apollo-managed funds and entities to make a €500 million investment into an ad hoc operating affiliate of Air France that will own a pool of spare engines dedicated to the airline’s Engineering and Maintenance activities, as detailed in the press release issued by the companies.

Under the agreement, Apollo-affiliated entities will subscribe to perpetual bonds issued by the ad hoc operating affiliate, which will be accounted as equity under IFRS. The proceeds of the transaction will enable Air France-KLM and Air France to further redeem the French State perpetual bonds, in accordance with article 77 bis of the European Commission’s “Temporary Framework for State aid measures to support the economy in the current Covid-19 outbreak,” hence pursuing the redemption of the French State aid.

As a result of the transaction, Air France-KLM will benefit from lower financing costs. The perpetual bonds will bear an interest rate of 6% for the first three years, and gradual step ups and caps will be applied thereafter. Air France will have the ability to redeem the bonds at any time after year three.

The Milbank team was led by Finance Practice Group Chair and partner Drew Fine, Global Corporate Group Practice Group Leader and partner John Franchini, Global Corporate partner Dean Sattler, Global Tax partners Max Goodman and Eschi Rahimi-Laridjani and Alternative Investments partner Catherine Leef Martin who provided Investment Advisers Act and Investment Company Act advice, along with Project, Energy and Infrastructure Finance special counsel Sean O’Neill, Global Corporate associates Daniel Tyrrell, Bianca Prikazsky, Zack Young, Mary Margaret Meehan and Yuman Xu, Transportation and Space associates Jeff Kaplan and Courtney Dickson, Project, Energy and Infrastructure Finance associate Zachary Shepperd, and Global Tax associate Michael Rivkin.