Avianca Holdings has secured a USD1.6 billion financing package from both existing and new lenders which will enable the Panamanian group to exit its Chapter 11 restructuring.
According to a motion filed with the US Bankruptcy Court for the Southern District of New York, the funding comprises USD1.05 billion from a group of lenders which includes some existing creditors and another tranche of USD550 million from a pool of entirely new lenders.
“The two tranches have slightly different commercial terms, but both will be used to replace the existing Tranche A [debtor-in-possession financing] and both will convert, at the Debtors’ option (subject to satisfaction of certain conditions precedent), to 7-year exit financing upon emergence [from Chapter 11],” the group said.
Avianca Holdings plans to use the new loans to fully refinance its existing full drawn USD1.4 billion DIP Tranche A financing that was approved by the US Bankruptcy Court in October 2020. In addition, the new funds will provide the group with around USD220 million in added liquidity. Avianca Holdings emphasised that the new funding would come at a lower interest rate than its existing DIP Tranche A facility.
“This newly committed financing will be a key component of any Chapter 11 plan that the Debtors propose. Between the existing Tranche B equity conversion option and these new debt conversion options, the Debtors have now secured commitments for the vast majority of the exit financing that they expect to obtain in preparation for emergence [from Chapter 11],” it said.
The new financing is the result of the process launched in April, in which Avianca Holdings sought up to USD1.8 billion in post-Chapter 11 financing. The Avianca Airlines (AV, Bogotá) parent has asked for an approval hearing to be held on July 26, 2021