Avianca Holdings S.A. Files Motion for Approval
by U.S. Court of
Approximately US$ 2.0 Billion in Debtor-in-Possession (“DIP”)
Financing
Two-Tranche Financing Includes
Approximately US$ 1.2 Billion of New Funds
Over 100 Lenders Participating in the
Approximately US$ 1.3 Billion Senior Secured Tranche A Facility:
US$ 880 Million of New Funds (US$ 590 Million by New
Institutional Lenders and US$ 290 Million from Holders of Majority
of Avianca’s 2023 Senior Secured Notes) and Approximately US$ 408
Million of Rollups and Purchase Consideration
US$ 240 Million of the Tranche A New Funds
structured as a Backstop to Allow for the Eventual Participation of
One or More Governments
Existing Lenders and New Investors Provide US$
722 Million for the Subordinated
Secured Tranche B Facility (Inclusive of US$ 386
Million of Rollup Loans)
BOGOTA, Colombia, September 21, 2020 – Avianca
Holdings S.A. (OTCMKTS: AVHOQ, BVC: PFAVH) (the “Company” or
“Avianca”) today announced that it has secured commitments for
debtor-in-possession (“DIP”)
financing totaling just over US$ 2.0 billion and has filed a
motion to approve the financing in the U.S. Bankruptcy Court for
the Southern District of New York (the “U.S. Court”).
Anko van der Werff, President and Chief Executive Officer of
Avianca, said, “We are extremely pleased with the support received
from a large number of third-party institutional investors and our
existing lenders. We believe this demonstrates the market’s
confidence in Avianca’s future as a strong, competitive and
profitable airline. Securing these financing commitments is another
concrete step forward in our Chapter 11 reorganization process and
we look forward to the U.S. Court approval of our proposed DIP
financing package. We have resumed operations in most domestic
markets and plan to add more domestic and international
destinations in the coming weeks, while we remain focused on
refining our reorganization plan to fully address the current
industry landscape and the effects of COVID-19, enabling our team to continue
driving efficiency and margin expansion and positioning Avianca to
successfully serve Latin America’s air travel needs for many years
to come.”
The DIP financing – inclusive of rollups of existing debt and
purchase loan consideration – is expected to be approximately US$
2.0 billion, consisting of a US$ 1.27 billion Tranche A
senior loan and a US$ 722 million Tranche B subordinated loan.
The DIP financing includes approximately US$ 1.217 billion of
new funds consisting of US$ 881 million in Tranche A and US$
336 million in Tranche B.
On August 28, 2020, as part of syndicating the Tranche A DIP
loan, the Company entered into a Restructuring Support Agreement
(“RSA”) with an ad hoc group of holders representing a majority of
Avianca’s 2023 senior secured notes who will provide US$
290 million in new funds (inclusive of US$ 63 million of
backstop) and roll up US$ 220 million of their existing notes
into Tranche A.
US$ 240 million of the Tranche A financing has been structured
as a backstop commitment, to allow for the eventual participation
of one or more governments.
The US$ 722 million Tranche B DIP loan includes US$ 336 million of
new money financing, as well as a rollup of approximately US$ 386
million of secured convertible debt issued in December 2019 and
January 2020 (the “Existing Convertible Debt”). The new money
financing was provided by certain of the Existing Convertible Debt
lenders, including Kingsland Holdings S.A, as well as third-party
investors; certain other Existing Convertible Debt lenders,
including United Airlines, participated solely in the Tranche B
loan rollup by refinancing their Existing Convertible Debt.
The DIP loans are secured by Avianca’s key assets (including the
Company’s ownership stakes in its LifeMiles and cargo subsidiaries,
as well as by its key brands and cash accounts). Both tranches are
secured by a lien on all available collateral, with Tranche B
subordinated in right of repayment to Tranche A. The collateral
pool for these DIP financings was recently substantially increased
via a series of agreements previously announced by Avianca.
The financing is subject to U.S. Court approval, with a hearing
scheduled for October 5, 2020, and other customary
conditions.
Seabury Securities LLC is serving as Avianca’s investment bank and
financial advisor. Goldman Sachs Lending Partners LLC and JPMorgan
Chase Bank, N.A. are serving as co-lead arrangers and joint bookrunners
of the Tranche A DIP Loans. Milbank LLP is serving as Avianca’s
legal advisor.
Additional information about the DIP financing is available on
Avianca’s website (www.aviancaholdings.com).
