Philippine Airlines Inc. Receives U.S. Court Approval to Access $ 505 Million in Debtor-in-Operator Financing

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DIP funding includes US $ 505 million to support PAL’s ongoing operations and recovery plan.

Manila, Philippines – Philippine Airlines Inc. (PAL) today announced that it has received final approval from US courts to access its debtor-in-use (“DIP”) financing totaling US $ 505 million, a key feature of the plan. restructuring of the national airline.

“This important milestone confirms that our recovery process is on track as we continue to work hard to achieve a fully consensus-based reorganization plan in an effective manner. We would like to thank our lenders, aviation partners and other creditors for their high level of support and their confidence in PAL’s future. We also appreciate the support of our valued customers as we continue to serve travelers and the Philippine economy ”, noted Gilbert F. Santa Maria, PAL President and Chief Operating Officer.

PAL’s DIP funding amounts to US $ 505 million, consisting of a US $ 250 million senior secured Tranche A term loan, of which US $ 20 million was drawn as a result of the approvals in the “first day” hearing on September 9, and a second secured bond a $ 255 million B Tranche multi-draw term facility. DIP funding could be converted (at PAL’s discretion) into long-term unsecured debt and equity – rather than repaying in cash – upon exiting Chapter 11.

“With the approval to fully access our DIP funding, PAL has the additional liquidity necessary to meet our current and future obligations and to continue operating as usual. PAL will become a lighter and more competitive airline thanks to our hardworking employees, the strong commitment of our majority shareholder and the strong support of our stakeholders and creditors ”, noted Nilo Thaddeus P. Rodriguez, chief financial officer of PAL. “We are grateful that the Court approved our motions and noted that this was a most efficient Chapter 11 hearing for a case of this complexity.”

In addition to the approval of the DIP funding, the US Bankruptcy Court also approved the various Restructuring Support Agreements with stakeholders, which is the critical first step towards confirming the Consensual Chapter 11 Restructuring Plan that is supported by nearly all of the major aircraft lessors and lenders, original equipment manufacturers and maintenance, repair and overhaul service providers, and some debt-financed lenders.

The U.S. Southern District of New York Bankruptcy Court also granted other final approvals, including PAL’s petitions regarding customer programs, critical and overseas vendors, and employee compensation. These approvals will enable PAL to become a stronger and better capitalized airline.

PAL will continue to operate flights in the normal course of business in accordance with safety regulations, and the Company expects to continue to meet all of its current financial obligations throughout the Chapter 11 process to employees, customers, the government and its donors, lenders, suppliers and other creditors.

Depositing entities

Philippine Airlines Inc. is the only party included in the Chapter 11 filing; while PAL Holdings Inc., which is listed on the Philippine Stock Exchange (PSE: PHI), and Air Philippines Corporation, known as PAL Express, are not included in the Chapter 11 dossier.


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