Avianca Holdings S.A. to receive debtor-in-possession financing and Government of Colombia financing commitment

Avianca Holdings S.A. today issued a statement regarding the Company’s expected debtor-in-possession (“DIP”) financing, following the announcement by the Republic of Colombia’s Ministerio de Hacienda y Credito Público (the Finance Ministry) that the management committee of the country’s Fondo de Mitigación de Emergencias (“FOME”, the Emergency Mitigation Fund) had approved the government’s participation in Avianca’s DIP financing, through a commitment of up to US$370 million in the proposed loan structure, side by side with private market investors. Avianca commented as follows:

We are pleased that the Government of the Republic of Colombia will participate in the Company’s DIP financing and express our gratitude for the confidence and support this commitment demonstrates.

As we previously disclosed on August 13, 2020, Avianca’s DIP loan financing is expected to consist of two tranches that include approximately US$1.2 billion of new funds as part of a US$ 2.0 billion overall financing facility (including rollups of existing debt and purchase consideration) which will allow the Company to finance its operations during the pendency of its Chapter 11 reorganization. In addition to the Colombian government committing to participate in the DIP loan -by providing approximately 30% of the new funds, or 20% of the total DIP financing- we are also very pleased with the positive reception the DIP loan structure has received from third-party institutional investors that, along with existing lenders, are expected to provide a substantial majority of the DIP loan financing.

Based upon the substantial indications of interest received to date, we are confident in our ability to complete the syndication process and finalize documentation within the next week.  We look forward to filing shortly thereafter a motion to approve the financing with the U.S. Bankruptcy Court, which motion will set forth our full DIP financing package, with approval expected during the month of September. The DIP loan, which will be 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) will contain certain conditions precedent to be satisfied prior to drawing those funds.