Air France-KLM in talks on state-backed loan package

Governments are urgently looking to support the world’s major airlines that are at risk of bankruptcy as air traffic has been brought to a standstill. (Shutterstock)
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Updated 04 April 2020

Air France-KLM in talks on state-backed loan package

  • French and Dutch governments said to be in talks over multi-billion euro deal

PARIS: Air France-KLM is in talks with banks to receive billions of euros in loans guaranteed by the French and Dutch governments, as the airline group braces for a sustained coronavirus shutdown, sources told Reuters.

The two states, which each own 14 percent of Air France-KLM, have paused a long-running boardroom feud to address the cash crunch, according to three people close to the discussions. Details and amounts are not finalized and could change, the people said. Under the most likely scenario, Air France may get as much as €4 billion ($4.3 billioon) in French-guaranteed loans while KLM receives close to €2 billion backed by The Hague, one source said.

The group has appointed BNP and Societe Generale to advise on refinancing, two of the sources said.

Both banks declined to comment.

“We are naturally in constant discussions with both governments,” an Air France-KLM spokeswoman said, declining further comment.

The French and Dutch governments also declined to comment in detail on the Air France-KLM talks. Both countries have expressed willingness to offer financial help.

“We’ve been in discussions for a long period of time with KLM and Air France and very specifically with the French state,” Dutch Finance Minister Wopke Hoekstra told Reuters on Wednesday. “It’s extremely important to help this vital company through these difficult times.”

Governments around the world are scrambling to prop up major airlines that are at risk of bankruptcy as the pandemic gathers pace, gutting travel demand and bringing traffic to an indefinite standstill.

The US Senate approved a $58 billion bailout for the American aviation industry on March 25. In Europe, Norwegian Air and SAS have received pledges of state support, while Lufthansa is poised to receive billions in aid.


Trump advisers urge delisting of US-listed Chinese companies that fail to meet audit standards

Updated 07 August 2020

Trump advisers urge delisting of US-listed Chinese companies that fail to meet audit standards

  • Growing pressure to crack down on Chinese companies that avail themselves of US capital markets but do not comply with rules
WASHINGTON: Trump administration officials have urged the president to delist Chinese companies that trade on US exchanges and fail to meet US auditing requirements by January 2022, Securities and Exchange Commission and Treasury officials said on Thursday.
The remarks came after President Donald Trump tasked a group of key advisers, including Treasury Secretary Steve Mnuchin and SEC Chairman Jay Clayton, with drafting a report with recommendations to protect US investors from Chinese companies whose audit documents have long been kept from US regulators.
It also comes amid growing pressure from Congress to crack down on Chinese companies that avail themselves of US capital markets but do not comply with US rules faced by American rivals.
“We are simply leveling the playing field, holding Chinese firms listed in the US to the same standards as everyone else,” a Treasury official told reporters in a briefing call about the report.
The US Senate unanimously passed legislation in May that could prevent some Chinese companies from listing their shares on US exchanges unless they follow standards for US audits and regulations.
Democratic Senator Chris Van Hollen, who sponsored the bill described the recommendations as “an important first step,” but said that “without the added teeth of our bill, this report alone does not implement the requirements necessary to protect everyday American investors.”
The administration’s recommendations, if implemented via an SEC rulemaking process, would give Chinese companies already listed in the United States until Jan. 1, 2022, to ensure the US auditing watchdog, known as the PCAOB, has access to their audit documents.
They can also provide a “co-audit,” for example, performed by a US parent company of the China-based affiliate tasked with auditing the Chinese firm. However, companies seeking to list in the United States for the first time will need to comply immediately, the officials said.
A State Department official told Reuters the administration plans soon to scrap a 2013 agreement between US and Chinese auditing authorities to set up a process for the PCAOB to seek documents in enforcement cases against Chinese auditors.
China said on Friday that the two countries have “good cooperation” in monitoring publicly listed firms.
“The current situation is that some US monitoring authorities are failing to comply with their obligations, and what they are doing is political manipulation — they are trying to force Chinese companies to delist from US markets,” foreign ministry spokesman Wang Wenbin told a media briefing.
The PCAOB has long complained of China’s failure to grant requests, giving it scant insight on audits of Chinese firms that trade on US exchanges.
The report also recommends requiring greater disclosure by issuers and registered funds of the risk of investing in China, as well as mandating more due diligence by funds that track indexes and issuing guidance to investment advisers about fiduciary obligations surrounding investments in China.
The moves come amid rising tensions between Washington and Beijing over China’s handling of the coronavirus and its moves to curb freedoms in Hong Kong, among other issues.