Avianca announced this Thursday that it will not use the $370 million loan granted to it by the Colombian government as part of its financial restructuring plan, which was widely criticized in the country.
The company filed for bankruptcy under U.S. law and on Oct. 5 received the green light from a New York court for its $2 billion financing plan, which, was structured in two tranches and included a government loan in the form of a debtor-in-possession (DIP), EFE reported.
“With the support of a large number of external institutional investors and existing lenders in its DIP financing, Avianca has the financial flexibility during this stage to support its operations and continue advancing in its reorganization plan without the participation of the Colombian Government,” the company said in a statement.
According to the company, “although the financing was structured to allow for the possible future participation of one or more governments, this financing did not depend on any government participation.
“Avianca appreciates the efforts of the Colombian government to help the country’s tourism sector, which has been significantly affected by the covid-19 pandemic, and remains committed to continue working together to assist in the ongoing economic recovery,” the statement adds.
The millionaire loan to Avianca was approved last August 29th by the administration committee of the Emergency Mitigation Fund (FOME) that manages the resources to face the coronavirus pandemic, in order to preserve the national air service, which caused strong criticism from the opposition and other sectors.
In granting the loan, the Colombian Government took into account that Avianca is the largest airline in the country, with a 45.5% share of the passenger market in 2019, according to the Ministry of Finance.
Avianca Holdings generates more than 21,000 direct and indirect jobs in Latin America, of which more than 14,000 are in Colombia, and works with a network of more than 3,000 suppliers.
The airline added in its statement today that it will continue to “focus on safely serving its customers and connecting individuals, families and businesses throughout Latin America.
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