LATECOERE : Latécoère Group refinances debt - Syndication of Group debt over seven years and reduction of shareholders dilution

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Latécoère reached an agreement with its banks for the refinancing of 96% of the Group's bank debt (excluding leasing) and 60% of the Convertible Bonds; this agreement reduces potential shareholders dilution.

The Company and the banks reached the agreement against the backdrop of the favorable recovery of Latécoère's financial position, which is reaping the benefits of the streamlining and adaptation measures it undertook over the last two years and of the recovery in the aeronautic sector, namely through its strong positioning on commercial aircraft programs (A320, A330, A380 and B787).

Moreover, the commercial success of the re-engined versions of Airbus and Boeing existing short-ranges postpones the need to launch significant new programs and the development costs associated.

The agreement between the Company and the banks, as registered by the Commercial Court of Toulouse on December 20, replaces the agreement signed on May 18, 2010, and is structured into four pillars:

Arrangement of a ¤319.8 million syndicated loan with three Tranches: Tranche A: ¤64.5 million, one-year amortizing loan, Tranche B: ¤225.6 million, seven-year amortizing loan, and Tranche C: four-year revolver for an initial principal amount of ¤29.7 million; Arrangement of a ¤76.0 million, four-year factoring agreement, syndicated between four factoring companies; Early redemption of 60% of the Convertible Bonds, refinanced by the 2018 final payment on Tranche B of the syndicated loan and obtention of issuer calls on a total of 2,860,000 residual Convertible Bonds, exercisable at par, when the Latécoère share exceeds ¤13.0 in average over a period of three consecutive days; Extension of existing currency hedging lines enabling the Group to hedge progressively its exposure to $ risk through the end of 2014.

The agreement reached puts an end to the period of uncertainty that began after Latécoère encountered financial difficulties at the end of 2009, and demonstrates the Company's financial partners' commitment to standing by Latécoère over the long term.

CEO François Bertrand and Executive VP & CFO Bertrand Parmentier "thank the banks for the constructive spirit they displayed in arranging this seven-year refinancing, which reduces potential shareholders dilution while securing the resources needed to finance the ramping up of production rates and development costs on certain programs."

Chairman of the Supervisory Board Pierre Gadonneix welcomed the signing of this agreement, which will enable the Latécoère Group to fully benefit from its industrial assets with the reaffirmed objective to contribute to the consolidation of the sector in the next 2-3 years.


Arrangement of a ¤319.8 million syndicated loan, of which ¤225.6 million over seven years

Latécoère finalized the arrangement of a ¤319.8 million syndicated loan, at the parent company's level, Latécoère SA, with three Tranches, replacing the existing bilateral loan agreements and ending the May 18, 2010 agreement.

The ¤64.5 million Tranche A of the syndicated loan is amortized over one year. The equivalent of 26% of the medium-term bilateral loans refinanced will accordingly be repaid in 2012. The ¤225.6 million Tranche B of the syndicated loan is amortized over seven years. In particular, this Tranche will refinance 60% of the Convertible Bonds that are redeemed early. The installments on Tranche B of the syndicated loan increase progressively to reflect the Group's commitments in terms of development and the ramp-up of the programs on which the Group is positioned. Installments amount to ¤19.0 million over 2013-2014,  ¤106.6 million over 2015-2017, and  ¤100.0 million in 2018. The average maturity of Tranche B is 5.4 years (versus 2.5 years previously for the refinanced medium-term bilateral loans). Tranche C of the syndicated loan consolidates the existing bilateral overdraft and spot lines into a single, confirmed revolving line of credit expiring 31/12/2015. The principal amount is set at ¤29.7 million, decreasing to ¤27.5 million on 31/12/2012 and to ¤25.0 million on 31/12/2013.

The syndicated loan was arranged at attractive market rates (see appendix 1), with Latécoère committing to traditional financial covenants for the period 2013-2018 (see appendix 2). Latécoère also provided traditional guarantees to the banks in the loan syndicate and to Convertible Bondholders, pledging notably the shares of its LATelec and LATecis subsidiaries and certain real estate properties as collateral.

Barber Hauler Capital Advisers acted as exclusive financial advisor to Latécoère for this operation. Norton Rose LLP and Camille et Associés acted as legal advisors to the Company

The Crédit Agricole Group and Société Générale are bookrunner and coordinator for the syndicated loan. Other banking groups participating in the syndication are the BPCE Group (mandated arranger), BNP Paribas (arranger), the CM-CIC Group (arranger), HSBC (arranger) and OSEO. Société Générale has been appointed agent for both the loan and the collateral. The Crédit Agricole Group has been appointed documentation agent.


Arrangement of a ¤76.0 million, four-year factoring agreement

Latécoère simultaneously arranged a ¤76.0 million, four-year factoring agreement that expires 31/12/2015.

The factoring companies participating in the syndicate are Natixis Factor (BPCE Group), Eurofactor (Crédit Agricole Group), CGA (Société Générale Group) and FACTOCIC (CM-CIC Group).

Natixis Factor was appointed agent on the factoring agreement.


Treatment of the Convertible Bonds

The agreement reached by Latécoère and the banks provides for the early redemption of 4,290,000 Convertible Bonds (CB), i.e. ¤42.9 million, equivalent to 60% of all Convertible Bonds, including 100% of the LATelec Convertible Bonds. This redemption is financed by the final payment of Tranche B of the syndicated loan in 2018.

The total number of CB is reduced from 7,150,000 to 2,860,000, thereby reducing the maximum potential dilution of Latécoère shareholders from 36% to 18%.

Latécoère holds issuer calls that may be exercised at par, starting January 2, 2012 and until January 31, 2015, by three cumulative annual tranches, when the arithmetic average of the closing prices of Latécoère shares - calculated over a period of three consecutive trading days among the 20 trading days preceding the date on which Latécoère notifies its decision to exercise each call - exceeds 130% of the unit face value of the CB, i.e. ¤13.0.

Moreover, the CB holders approved, at General Meetings on December 21, 2011, the acceleration of the conversion period for the residual CB to January 2, 2012. The latter are convertible at any time between January 2, 2012 and July 30, 2015, the date on which the CB mature. The conversion price remains unchanged at ¤10.0 per Latécoère share.

Equity warrants having been issued simultaneously with the CB, a similar acceleration of the exercise period will be offered to warrant holders at an upcoming General Meeting of warrant holders to be held the same day as the Latécoère Shareholders Meeting convened to approve the 2011 financial statements, which is scheduled for May 3, 2012.

About Latécoère

Latécoère is a tier 1 partner to major international aircraft manufacturers (Airbus, Embraer, Dassault, Boeing and Bombardier), in all segments of the aeronautical market (commercial, regional, corporate and military aircraft), specializing in three fields:

Aerostructures (56% of total revenue): fuselage sections and doors. Interconnexion systems (32% of total revenue): onboard wiring, electrical harnesses and avionics bays. Engineering and Services (12% of total revenue): research, design and manufacturing of equipment.

The Group employs 3,700 people, in ten countries. Latécoère had total consolidated revenues of ¤464 million in 2010 and as of December 31, 2010 its order book stood at ¤2.3 billion (based on a USD/EUR exchange rate of 1.35).
Latécoère, a French corporation (société anonyme) with capital of ¤17,219,994 divided into 8,609,997 shares with a par value of ¤2 per share is listed on Euronext Paris - Compartment C.

ISIN code: FR0000032278 - Reuters code: LAEP.PA - Bloomberg code: LAT.FP

CONTACTS
Groupe LATECOERE

Bertrand Parmentier / Executive VP & CFO
Tel.: +33 5 61 58 77 00
bertrand.parmentier@latecoere.fr

Actus
Corinne Puissant / Investor Relations
Tel.: +33 1 53 67 36 57 - cpuissant@actus.fr
Anne-Catherine Bonjour / Media Relations
Tel.: +33 6 53 67 36 93 - acbonjour@actus.fr

APPENDIX 1: Margins on the syndicated loan

Tranche A 150 bps
Tranche B 325 bps from 2012-2014 350 bps from 2015-2016 425 bps from 2017-2018
Tranche C 300 bps + variable component based on utilization of the line

Note: Margins are applied on variable market rates.


APPENDIX 2

a)     Definitions of aggregates not included in the registration document


Free Cash Flow Designates, in the consolidated accounts: consolidated net debt at beginning of period reduced by consolidated net debt at end of period increased by the sum of new mid-term and long-term bank debts (over one year) arranged during the period.
Economic EBIT Designates, in the consolidated accounts: the Recurring Operating Income corrected by the amount of change in WIP NRC, the amount of change in WIP Curve and the amount of provisions associated to WIP NRC and Curve adjusted for commissions and banking services accounted as operating charges.
Consolidated Shareholders' Equity Designates the shareholders' equity group share, i.e. in the consolidated accounts the sum of: share capital premiums adjusted reserves (including other reserves, accumulated net income) net of the fair value of unsettled hedging instruments for rate and currency risks, of translation differences and of minority interests.

b)  Definitions of financial covenants

Ratio R1 Consolidated net debt / Consolidated Economic EBIT
Ratio R2 Consolidated net debt / Consolidated Shareholders' Equity
Ratio R3 Minimum level of Free Cash Flow
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