Avianca Holdings (AVH) is set to renegotiate the terms of a USD550 million bond due to mature in May 2020.
According to a company statement, the board of directors agreed during an extraordinary meeting on May 2 to grant management the powers needed to proceed with a liability management transaction in relation to its outstanding notes. In addition, the board of directors also authorised certain of AVH's subsidiaries to act as guarantors of any new securities issued in connection with the liability management transaction.
The seven-year, fixed-rate notes bear interest of 8.375% and are listed on the Euro MTF market of the Luxembourg Stock Exchange. The notes, which are payable semi-annually in arrears due on May 10 and November 10, are fully and unconditionally guaranteed by six of Avianca Holdings’ subsidiaries namely Avianca, Avianca Costa Rica, Avianca Leasing, TACA, TACA International Airlines, and Avianca Perú in an amount equal to USD375 million.
Avianca's Senior Vice President of Finance, Roberto Held, said in a 4Q18 earnings call in February that three banks had been engaged to map out a way forward. At the time, he hinted that a potential solution could lie in the US capital market adding that further details would be revealed later in the year.
In its FY2018 financials, AVH warned that its significant debt exposure, primarily due to its aircraft financing obligations, could inhibit its ability to meet its impending obligations including the repurchase or repayment of currently outstanding bonds in the international market.
As of December 31, 2018, AVH had USD4.0076 billion of total debt outstanding, with interest of USD212.3 million in 2018.
