Avianca Holdings revealed to the financial market the conditions under which it obtained the US$2,000 million that will help it to move forward in the midst of the economic crisis caused by the COVID-19, El Espectador reported.
The financing scheme under the figure of debtor in possession (DIP) includes a Senior Secured Tranche A of US$1.27 billion and a subordinated Secured Tranche B of US$722 million. The airline would receive close to US$1.2 billion in new funds: US$881 million in Tranche A and US$336 million in Tranche B.
According to the document detailing the commitments, the first tranche (A-1) consists of a loan of $591.4 million and a bond issue for $437.6 million, with a 2% issuance discount, by a group of investors. The second tranche (A-2) consists of $176.4 million in loans and $64 million in bonds, with a 2% issuance discount, by a group of investors.
And the third tranche (B) is the US$722.9 million from United Airlines Inc. a subsidiary of Kingsland Holdings Limited, Citadel Advisors LLC and other investors that were Avianca’s lenders under the loans disbursed in January 2020, among others. In this regard, in the event of termination of the funding commitments or repayment of any portion of the loans granted, there will be a fee corresponding to 10% of the amount of the terminated commitment or repaid loan.
In all three cases the term of payment will be November 10, 2021. The reference rate is Libor (London Interbank Offered Rate) + 10.5% for cash payments and Libor + 12% for payments in kind.
It is worth remembering that at the beginning of this month the United States Bankruptcy Court in the Southern District of New York approved the financing plan presented under the Chapter 11 process in mid-September. On October 16, Avianca Holdings received the initial disbursement of the financing plan.
The guarantor of this operation will be Aerovías del Continente Americano S.A. Avianca and the other subsidiaries of Avianca Holdings S.A. under Chapter 11 of Avianca Holdings S.A. In addition, JPMorgan Chase Bank, N.A. was left as administrative agent and guarantor.
The guarantee that backs up Avianca’s obligations is the totality of the assets and properties (whether tangible, intangible, real, personal or mixed) of Avianca, “subject to certain limited exclusions set out in the contracts and in the DIP Order”.
It was also established that in the event of a default, the lenders and bondholders (through the agents) may declare the obligations of the lenders terminated, declare the obligations (amount of principal owed plus interest and other amounts due) immediately due and payable, and terminate the court order of automatic stay of claims against the debtor and the guarantors under Section 362 of the U.S. Bankruptcy Code.
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