Avianca Secures A Loan Of Up To $250 million

Latin American airline holding company Avianca Holdings has managed to secure a loan of up to $250 million from Kingsland Holdings and United Airlines. Chicago based United Airlines and Kingsland Holding’s Roberto Kriete have today, October 7th, 2019 agreed to provide financing to the tune of 250 million dollars to help Avianca Holdings.

640px-Avianca_(5720690990)
Avianca Holdings to get $250 million. Photo: BriYYZ Wikimedia Commons

The pair have agreed to offer Avianca Holdings the money at an agreed-upon rate of 3% over four years.

Avianca still needs other creditors to agree to the deal

This is still not a done deal entirely, as Avianca Holding still needs the approval of other creditors and the closing of the AVH’s bond exchange offer.

Avianca Foker 50
The loan is for four years at 3%. Photo: Pedro Aragão Wikimedia Commons

According to a news release from Avianca Holdings the company has managed to secure up to $250 million after having agreed to the conditions.

United Airlines and Kingston Holdings have agreed to the four-year loan at a rate of 3%. The interest is to be at the end of the four-year term to give Avianca Holdings greater flexibility.

At Avianca’s option, the loan will convert into company shares at $4.6217 which is the equivalent of a 35% premium based on the 90-day average share price up until October 3rd, 2019.

The loan is subject to certain conditions being met that include the AVH share price trading above $7.00. Should they decide to do so, the loan can be, at the discretion of United Airlines and Kingsland Holdings, converted into shares.

The financing put in place will be guaranteed by a pledge stock in AVH’s largest subsidiaries.

Completing the final drafting and some of the finer details of the loan is on-going with a completion date expected sometime this month.

Other conditions that affect the loan include the successful end to Avianca’s debt in a manner consistent with its 2021 plan. The aviation company also needs to close the exchange offer on its 2020 bond of $550 million, as well as the closing of the company’s exchange offer for its US$550 million 2020 bond.

Video of the day:

United Airlines and Kingsland Holdings are happy with the deal

When speaking about the financing being put in place United Airlines senior vice president of Alliances John Gebo said:

“United congratulates Avianca Holdings on this important step in its Avianca 2021 plan. We look forward to Avianca’s successful achievement of agreements with its other stakeholders, and to working together with Avianca to complete final documentation for our loan.”

Avianca Airbus A330

The loan is an important step in Avianca’s plan. Photo: Pedro Aragão Wikimedia Commons

Following those remarks the Chairman of Kingsland Holdings Roberto Kriete commented on the agreement saying:

“We are extremely pleased to have reached agreement with Avianca Holdings on the terms of this facility.” “We look forward to the successful conclusion of the company’s debt reprofiling initiative, and to working with management to support the success of the Avianca 2021 plan.”

Avianca Holdings CFO Adrian Neuhauser concluded the statement saying:

“This agreement represents another crucial step in the financial execution of our Avianca 2021 plan, building on the success we have achieved to date in the bond exchange offer. We believe the terms we have agreed to are very attractive, and we are grateful for the confidence United and Kingsland continue to place in the company and its management.”

Avianca is looking at another loan

To conclude the bond exchange offer, Avianca is working hard to conclude negotiations with its creditors and fulfilling all conditions necessary to finish up the bond offer, thereby expediting the closure of the stakeholder loan.

Avianca Boeing B787-8
Avianca is working hard to finalize the deal. Photo: Alan Wilson Wikimedia Commons

Once everything has been wrapped up, Avianca would be in a position to offer its preferred shareholders the opportunity to take part in a $125 million loan that has the same conditions as the United and Kingsland loan deal.

Leave a Reply