Avianca Holdings gets court approval of $2 billion of DIP financing

By Sarah Lizee

Olympia, Wash., Oct. 5 – Avianca Holdings SA secured approval for debtor-in-possession financing totaling just over $2 billion from the U.S. Bankruptcy Court for the Southern District of New York, according to a press release.

As previously reported, the DIP financing, inclusive of rollups of existing debt and purchase loan consideration, consists of a $1.27 billion tranche A senior loan and a $722 million tranche B subordinated loan.

The DIP financing includes $1.217 billion of new funds consisting of $881 million in tranche A and $336 million in tranche B.

On Aug. 28, as part of syndicating the tranche A DIP loan, the company entered into a restructuring support agreement with an ad hoc group of holders representing a majority of Avianca's 2023 senior secured notes who will provide $290 million in new funds, inclusive of $63 million of backstop, and roll up $220 million of their existing notes into tranche A.

Also, $240 million of the tranche A financing has been structured as a backstop commitment to allow for the eventual participation of one or more governments.

The $722 million tranche B DIP loan includes $336 million of new money financing, as well as a rollup of approximately $386 million of secured convertible debt issued in December 2019 and January 2020.

The new money financing was provided by some of the existing convertible debt lenders, including Kingsland Holdings SA, as well as third-party investors. Other existing convertible debt lenders, including United Airlines, participated only in the tranche B loan rollup by refinancing their existing convertible debt.

The DIP loans are secured by Avianca's key assets, including the company's ownership stakes in its LifeMiles and cargo subsidiaries, as well as by its key brands and cash accounts. Both tranches are secured by a lien on all available collateral, with tranche B subordinated in right of repayment to tranche A.

The collateral pool for these DIP financings was recently substantially increased via a series of agreements previously announced by Avianca.

Seabury Securities LLC is acting as Avianca's investment bank and financial adviser. Goldman Sachs Lending Partners LLC and JPMorgan Chase Bank, NA are acting as co-lead arrangers and joint bookrunners of the tranche A DIP loans. Milbank LLP is acting as Avianca's legal adviser.

Avianca is a Bogota, Colombia-based airline holding company that filed bankruptcy on May 10. The Chapter 11 case number is 20-11133.

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