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Southern Air eliminates all of its long-term debt with a debt-for-equity exchange

Southern Air (2nd) (DHL) (Cincinnati) has issued this statement about its restructuring process:

Southern Air Holdings, Inc. (SAHI) has completed a debt-to-equity exchange that eliminates all of the company’s long-term debt, enabling SAHI to significantly enhance its strategic position and growth plans.

The consensual secured debt-to-preferred equity exchange satisfies approximately $90 million in senior secured term debt by issuing to its former term lenders a new class of preferred stock and warrants. The newly issued preferred stock is non-voting and non-convertible, and provides for an annual stated yield accruing in kind (not in cash), and a liquidation preference over common shares. The exchange transaction was approved by the United States Department of Transportation and by 100% of the participating term loan lenders. In addition to the debt-for-preferred equity exchange, SAHI’s lenders agreed to renew and increase to $20 million a working capital line of credit in favor of various SAHI affiliates.

“The completion of this debt-for-equity exchange sets a new stage for growth in our air cargo platforms,” said SAHI and Worldwide CEO Dan McHugh. “Southern Air now has a clean balance sheet and no long term debt. With positive cash flow, we are poised to grow our existing 777 and 737 programs with global logistics leader DHL Express and other global customers, and in view of the closing of our acquisition of 767 carrier Florida West International Airways (Florida West), Worldwide is strengthening and expanding its highly reliable, cost efficient and customer-oriented ACMI, CMI and other air cargo services.”

Worldwide recently announced its plans to acquire Miami-based Florida West, a U.S. all cargo carrier operating 767 aircraft.

McHugh added, “Our lenders’ willingness to convert all of their term debt to preferred equity demonstrates a firm commitment to SAHI’s management vision, strategic positioning and growth plans, and we greatly appreciate their support in this debt conversion process.”

SAHI was advised in the transaction by the investment banking firm Imperial Capital and the law firm Berger Singerman.

Southern Air currently operates four Boeing 777-200 freighters on an around-the-world basis for the leading global express delivery provider DHL. Southern Air also operates five Boeing 737 aircraft for DHL, flying key routes to support DHL’s North American air networks.

All Boeing 747s have been retired.

 

Copyright Photo: Chris Sands/AirlinersGallery.com. Southern Air now operates five Boeing 737-400 freighters in DHL colors including ex-LOT 737-45D N495SA (msn 27157) at Calgary.

DHL-Southern Air aircraft slide show: AG Airline Slide Show

Southern Air aircraft slide show: AG Airline Slide Show

AG Designed by photographers

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