Philippine Airlines promises older planes for loans

0

Philippine Airlines (PR, Manila Ninoy Aquino Int’l) has pledged 15 planes, replacement engines and frequent flyer miles as collateral to secure the loans needed as part of its ongoing restructuring process.

This is according to a September 17, 2021 notice of filing additional Restructuring Support Agreements (RSA) between Philippine Airlines and various counterparties with the U.S. Bankruptcy Court in the Southern District of New York, where the airline is in. under Chapter 11 voluntary. a bankruptcy proceeding to pay off $ 2.1 billion of its $ 6 billion debts.

It comes after he recently obtained court approval to draw up to $ 20 million from a $ 505 million debtor-in-operator (DIP) term loan facility covered by the majority shareholder, Buona Sorte Holdings Inc., owned by the family of tycoon Lucio. Sunbathe. The DIP facility will be split into two tranches of $ 250 million (Tranche A) and $ 255 million (Tranche B) with an interest rate of 9.5% per annum, the term sheet says.

According to RSA, Philippine Airlines will put in place the following security package for the $ 250 million A tranche of the term loan facility:

  • eight mid-life A320-200s and associated engines: RP-C8604 (msn 3087), RP-C8606 (msn 3187), RP-C8609 (msn 3273), RP-C8611 (msn 3455), RP-8612 (msn 4553) ), RP-C8613 (msn 3579), RP-C8614 (msn 3652) and RP-C8615 (msn 3731);
  • four DHC-8-300 and associated engines belonging to the company: RP-C3016 (msn 653), RP-C3017 (msn 657), RP-C3018 (msn 658) and RP-C3020 (msn 583);
  • three company-owned DHC-8-Q400s and associated engines: RP-C3031 (msn 4069), RP-C3036 (msn 4023), plus an unidentified aircraft:
  • five additional spare engines; 1x General Electric, 1x Rolls-Royce, 1x International Aero Engines; and 2 CFM International power plants;
  • Mabuhay Miles loyalty program contracts and associated assets.

Creditors include PK AirFinance, Cathay United Bank, BNP Paribas, JA Mitsui Leasing, MUFG (Peak II), MUFG / JP Lease Products & Services, DAE Capital, Deucalion Aviation, Haitong UniTrust, Aircastle, Avolon, Goshawk, ORIX Aviation. TrueNoord, as well as AMCK Aviation, VAH, Macquarie AirFinance, GECAS, SMBC Aviation Capital, Castlelake and EXIM Bank (United States of America).

Interest on the Tranche A loan facility will only be charged for the first 27 months with quarterly amortization from month 28. The proceeds will be used to refinance pre-petition bridging loans, for fee payment, costs and expenses of DIP lenders, for working capital, administration costs of the Chapter 11 case and for general business purposes.

The USD 255 million multi-draw commitment of Tranche B of the DIP Term Loan Facility will be secured by a junior / subordinate lien on the residual value of the Tranche A securities package. It will be converted to 79.50 % of the capital of the reorganized company on the effective date.

Philippine Airlines can also use a $ 125 million optional exit facility with an interest rate of 10.5% to support operations after the Chapter 11 process is completed. This would be secured by the Tranche A security package.

The $ 60 million and $ 25 million secured bridge loans from February and May 2021 are to be fully refinanced through the DIP Term Credit Facility. Secured debt, including secured aircraft debt, needs to be restructured.

As part of the overall restructuring of the company, the Philippine Airlines fleet will grow from 91 aircraft from 2019 to 70 aircraft. General unsecured debts will receive their pro rata share (20.5%) of the capital of the reorganized company. Ordinary trade receivables held by trade creditors, vendors, suppliers, service providers, independent contractors or professionals who will provide goods and services to the reorganized company after the effective date will be intact and paid. in the ordinary course of business.

All existing Philippine Airlines participations will be forfeited and holders of such participations will not receive a refund. All existing interests held by Philippine Airlines in subsidiaries will be reinstated and will remain in place.

Within 12 months of the emergence, Philippine Airlines will initiate an exchange process to convert shares of the reorganized company into shares of PAL Holdings, the airline’s publicly traded parent company. The initial board of directors of the reorganized company will be composed of directors appointed by the lenders of the B tranche of the DIP term loan.

Prior to the Chapter 11 filing, Tan provided Philippine Airlines with a total of $ 100 million in bridging funding which, according to the airline’s attorneys, helped the airline continue operations and “avoid a devastating free fall. towards bankruptcy ”.

Leave A Reply

Your email address will not be published.