Avianca Holdings has announced it has secured a commitment from United Airlines Holdings and minority shareholder Kingsland Holdings for the provision of a loan for a minimum of USD200 million dollars.
The Panama-based carrier holding said in a stock market filing the senior secured convertible loan would become fully binding once all the necessary documents between the parties had been finalised, likely around October 15, 2019, and subject to certain other conditions, including the successful conclusion of Avianca's debt reprofiling plan in a manner consistent with the Avianca 2021 turnaround plan, as well as the closing of the company's exchange offer for its USD550 million 2020 bond.
According to the terms of the commitment, United and Kingsland will provide a minimum of USD200 million in financing with a further USD50 million to come from a third-party lender.
"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," a statement said.
"The loan will convert into shares at Avianca's option at an equivalent price per share of USD4.6217, 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 USD7.00; 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."
Avianca Holdings will use proceeds from the loan for general corporate purposes once it has repaid all obligations under its existing USD50 million loan from Kingsland.
In addition, United, Kingsland, and Avianca Holdings have agreed to the terms and conditions under which Avianca Holdings expects to raise an additional USD125 million from its [unspecified] preferred shareholders. The funding will come in the form of senior secured convertible bonds, which Avianca Holdings expects to be structured as a subscription rights offering proportioned to each of the preferred holder’s shareholdings in the company.
"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," the CFO of Avianca Holdings S.A., Adrian Neuhauser, said. "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."
