Japan Airlines (JAL) plans to raise ¥300bn using a package comprising a term loan and subordinated loan and a hybrid bond issuance – collectively referred to as a hybrid finance package.
JAL said that it was raising new funds to improve cash flow and further strengthen its financial position to accelerate its efforts toward further reforming its business plan and diversifying its revenue sources.
JAL has opted for the hybrid finance for its intermediate nature between capital and liabilities, and since it is a liability, it does not dilute stocks, but it is a voluntary deferral of interest and is ultra-long term. Also , in the pursuit of sustainable growth, JAL says proceeds will be allocated “to introduce the A350-1000 as its new flagship aircraft.
The first loan has two tranches: ¥150 billion 30-year A tranche to be executed 30 Sept, 2021, and ¥50 billion 30-year B tranche to be obtained by November 30. Lenders include Development Bank of Japan, MUFG, Mizuho, and Sumitomo Mitsui Banking Corporation.
The ¥100 billion hybrid bond issue will be led by Mizuho Securities as administrative lead manager.