Homologation of Latecoere’s Comprehensive Recapitalization Agreement

Regulatory News:

Latecoere, a tier one partner to major international aircraft manufacturers, today reached a major step forward in its recapitalization with the signature and the homologation by the Toulouse Commercial Court of a binding conciliation protocol between its reference shareholder Searchlight Capital Partners L.P. (“SCP”), the European Investment Bank (“EIB”), and its lenders under certain state guaranteed loans (Prêts Garanti par l'Etat), (the "PGE Lenders"), reflecting the terms of the agreement in principle reached on May 8, 2023 (“Recapitalization Agreement”). This Recapitalization Agreement has been negotiated and concluded under the aegis of the Comité Interministériel de Restructuration Industrielle (CIRI).

While the aerospace industry has been through an unprecedented crisis linked to the COVID pandemic and subsequent restart – Latecoere has itself been faced with significant challenges in order to meet increasing production demand, absorb significant inflation pressures and also contend with supply chain challenges and shortages of parts from key suppliers. This Recapitalization Agreement provides Latecoere with a solid capital structure to continue supporting its customers through the industry ramp-up currently planned for the remainder of 2023 and beyond.

The key terms of the recapitalization, consistent with the May 8, 2023 market communication, include:

• Immediate liquidity through a €45 million loan from funds advised by SCP, to be repaid by way of set-off with SCP's subscription in the €100 million rights issue (“SCP Loan”);

• Following its July 2023 AGM, the Company is expecting to launch a rights issue with shareholders’ preferential subscription rights for a minimum amount of €100 million¹ fully underwritten by SCP, and to be concluded before year end (“Capital Increase”);
• €183 million debt reduction, providing Latecoere with a sustainable capital structure. The reinstated debt maturity is to be set to December 2027; and
• Affected lenders will retain exposure to future value creation through a newly issued "better fortunes" (retour à meilleure fortune) mechanism (“RMF”).

Thierry Mootz, Group Chief Executive Officer, says: "I would like to thank all the parties involved for having made possible this conciliation protocol agreed and homologated. This action significantly reinforces our capital base and enables us to meet the increasing growth requirements of our customer base and realize Latecoere's full potential. We are grateful for the support of our anchor shareholder, our lenders and the CIRI, in achieving our common ambitions. I would also like to thank all our employees for their commitment and talent. They are the reason Latecoere is given the confidence by its key customers within the aerospace sector every day. With the signature of this conciliation protocol, I also wish to reiterate the principles of our industrial vision; to maintain our decision-making center in Toulouse, to consolidate our value-added activities in the Toulouse region, and to continue to invest in our global operational footprint".