1987 - Year of the shrinking market?
Syndicate managers hungry for Euroequity mandates need not bother calling KLM. "We won't be in the equity market for another four years,' said chief financial officer Alberda van Ekenstein. "We don't think the government will sell off any more.'
This March the Dutch government reduced its holding in the company by 18.2% to 36.6%, after outstanding warrants are exercised. The international issue raised over $300 million.
Over the next five years, KLM projects investments and redemptions to amount to about Dfl8.5 billion ($3.7 billion). "About 60 to 70% of this will be financed from the cash flow,' said van Ekenstein. "Of the remainder, Dfl1.5 billion will be drawn from the liquidity buffer.' This leaves KLM with financing needs of only around Dfl500 ($22 million) until 1991.
Because of the nature of its business, the airline needs to borrow very little working capital. KLM expects to buy one extra Boeing 747 a year and in addition will soon modernise its European fleet. The new aircraft will be financed by lease agreements, mainly concluded in Japan at present.
"Our main aim is always asset-financing or bond issues with warrants,' said van Ekenstein.