Aeroméxico (AM, México City International) has secured USD1 billion in Debtor-In-Possession (DIP) financing - a form of funding for companies undergoing restructuring - with New York-based alternative investment firm Apollo Global Management.
“Today we obtained, subject to court approval, commitments for a USD1 billion senior secured superpriority multi-tranche debtor-in-possession term loan facility, a DIP Facility, with the funds managed by affiliates of Apollo Global Management Inc.,” Grupo Aeroméxico, currently undergoing Chapter 11 bankruptcy proceedings in the United States, said in a statement to the Mexican Stock Exchange.
The facility will allow the flag carrier to remain liquid under the proceedings, and the resources can only be used for certain authorised expenses including operational and general corporate costs as well as restructuring.
The loan, administered by Apollo Global Management affiliates, consists of two preferential and guaranteed tranches, the first of USD200 million and the second, convertible into capital, for USD800 million. Each creditor of the second tranche will have the option to convert their liabilities into the shares of the restructured company, subject to certain conditions.
As soon as the court provisionally approves the DIP financing, Aeroméxico will be able to access up to USD100 million of Tranche 1, with the other half becoming available depending on conditions not specified in the statement. USD175 million from Tranche 2 may be accessed initially, the rest in batches of USD100 million each.
“This is a critical milestone in the ongoing process to transform our company with the goal of driving long-term sustainable growth for Aeroméxico,” said the airline's chief executive, Andrés Conesa.
With the funds, Aeroméxico will have the liquidity to meet its future obligations in a timely and orderly way as well as to continue operations during and after the restructuring process, the statement said.
