Avianca Holdings has reached agreement with United Airlines and Kingsland Holdings S.A. regarding the terms of United and Kingsland’s proposed financing to AVH of up to US $250 million, and established the conditions precedent to the transaction.
United and Kingsland have agreed to provide Avianca a four-year loan at an interest rate of 3%; interest will be paid-in-kind until maturity, granting Avianca greater financial flexibility. The loan will convert into shares at Avianca’s option –at an equivalent price per share of US $4.6217, representing a 35% premium over the 90-day weighted average price through October 3, 2019– subject to certain conditions, including AVH’s share price consistently trading above seven dollars; the loan may also be converted into shares voluntarily at the discretion of United Airlines and Kingsland Holdings. The financing will be secured by a pledge of stock in AVH’s major subsidiaries.
Drafting of final documentation is ongoing and is expected to be executed by mid-October. Funding remains subject to certain other conditions, including the successful conclusion of Avianca’s debt reprofiling plan in a manner consistent with the Avianca 2021 plan, as well as the closing of the company’s exchange offer for its US$550 million 2020 bond.
Avianca continues to work on quickly finalizing negotiations with its creditors and fulfilling the conditions necessary to conclude the bond exchange offer, in order to expeditiously close the stakeholder loan.
Once this process is concluded, Avianca expects to offer its preferred shareholders the opportunity to participate in US $125 million financing under similar conditions.
Top Copyright Photo: Avianca (Colombia) Boeing 787-8 Dreamliner N780AV (msn 37502) LAX (Ron Monroe). Image: 947817.
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