- Avianca Informed Today That It Has Successfully Reprofiled Substantially All of Its Debt and Lease Obligations, Consistent With the Financing Plan It Laid out in June of This Year
- United and Kingsland Have Funded Their Previously-Disclosed USD $250 Million Commitment, Investing in Four-Year Senior Secured Term Loans Which Are Mandatorily Convertible Into Avh Common Shares
Avianca Holdings S.A. (“Avianca”) has successfully renegotiated substantially all of its debt and lease obligations as well as reached agreements with its key suppliers. As a result, the airline was able to complete the funding of USD $250 million in mandatorily convertible loans (the “Convertible Loans”) by United Airlines, Inc. (“United”) and an affiliate of Kingsland Holdings Limited (“Kingsland”). In addition, Avianca announced that it has secured an incremental USD $125 million of committed financing.
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Completion of the Balance Sheet Reprofiling Program
Avianca successfully reached broad agreement with its creditors last week, allowing it to comply with key conditions precedent for funding of the Convertible Loans by United and Kingsland. In turn, the funding of the Convertible Loans allowed Avianca’s agreements with its creditors to go effective, reprofiling substantially all of its loans and aircraft lease obligations. In addition, funding of the Convertible Loans triggers the automatic exchange of approximately USD $484 million aggregate principal amount of Avianca’s current May 2020 bonds (the “Secured May 2020 Bonds”) for secured bonds due May 2023 (the “Secured May 2023 Bonds”), under the terms of a previously announced, successfully executed exchange offer for Avianca’s original May 2020 Bonds (the “Unsecured May 2020 Bonds”).
Avianca’s finance team, led by its CFO, Adrian Neuhauser, successfully negotiated with more than 125 creditors and suppliers over the course of the financial reprofiling process launched in late June 2019. In addition to securing extensions of Avianca’s bank lines and letters of credit and ensuring the exchange of over 88.1% of the Unsecured May 2020 Bonds for Secured May 2023 bonds, the reprofiling program secured more than USD $250 million of additional cash relief from lessors, aircraft lenders and certain other corporate lenders, substantially strengthening the Company’s liquidity position.
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Funding of USD $250 million of Financing
Avianca received the previously-announced USD $250 million of committed financing from United and Kingsland. This financing consists of USD $250 million of Convertible Loans that mature in four years and with a 3% payment-in-kind (PIK) annual interest rate. United funded USD $150 million and Kingsland funded USD $100 million. United and Kingsland’s Convertible Loans are convertible into the Company’s equity (common shares or preferred shares at the lenders’ option).
The Convertible Loans are subject to mandatory conversion any time after the first anniversary of the loan at the election of Avianca, subject to Avianca meeting certain conditions precedent, including, but not limited to: (i) a trailing six-month average daily ending cash balance (subject to certain adjustments) of at least USD $700 million and (ii) the AVH ADS trading price of at least USD $7.00 for 90 of the prior 120 trading days.
