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Avianca Holdings Receives US Court Approval to Access $2 Billion in Financing
Avianca Holdings announced that it has received approval from the U.S. Bankruptcy Court for the Southern District of New York to access its Debtor-In-Possession (DIP) financing totaling just over $2 billion.
“The approval of the DIP financing package is a significant milestone and an important step forward for Avianca. We would like to again thank our lenders for their support and confidence in Avianca’s future success. We continue to work on our go-forward operating plan in order to emerge from this process as a stronger and more efficient airline, and look forward to presenting our plan to the U.S Court as we move forward in the Chapter 11 process,” Avianca Chief Financial Officer Adrian Neuhauser said in a statement from the airline
Anko van der Werff, President and Chief Executive Officer of Avianca, added, “With U.S. Court approval to fully access this DIP financing, Avianca has ample liquidity to support our operations as we continue flying and serving customers. With COVID restrictions lifted, we are pleased to have safely resumed passenger flights to 21 cities in Colombia and 14 international destinations and look forward to adding more destinations to meet our customers’ travel needs over the coming months. We thank our customers for their loyalty, and we remain steadfast in our commitment to connecting people, families and businesses across Latin America through the Chapter 11 process and beyond.”
As previously announced on Sept. 21, the Colombian carrier’s DIP financing totals approximately $2 billion, consisting of a $1.27 billion Tranche A senior secured financing and a $722 million Tranche B secured subordinated loan. The DIP financing includes approximately $1.2 billion of new funds.
Funding remains subject to the entry of the order by the judge in the U.S. Court and certain conditions precedent, all of which are expected to be satisfied in the coming week. Seabury Securities LLC is serving as Avianca’s investment bank and financial advisor. Goldman Sachs Lending Partners and JPMorgan Chase, 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.
Phases of Bankruptcy Procedure
Third-party financing to obtain additional funds for ongoing operations and maintain their businesses is part of the first phase of the restructuring process under Chapter 11.
After the approval of the Court, the company will go to phase two, which is the negotiation and preparation of a reorganization plan, which includes meetings with the official committee of unsecured creditors and the finalization of a long-term strategic business plan.
The subsequent third phase will involve the confirmation of the reorganization plan, after which the company will exit Chapter 11 as a reorganized entity, though likely maintaining much of the same branding and customer-facing elements of the airline from before entering the process.
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