Debt financing

Grupo Aeromexico’s reorganization plan is based on new equity and debt financing

Aeromexico planes are pictured at Benito Juarez International Airport in Mexico City, Mexico on July 14, 2021. Photo taken on July 14, 2021. REUTERS / Luis Cortes / Files

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  • Davis Polk & Wardwell LLP

  • Willkie Farr & Gallagher LLP

  • Akin Gump Strauss Hauer & Feld LLP

  • Gibson, Dunn & Crutcher LLP

  • Morris, Nichols, Arsht & Tunnell LLP

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(Reuters) – Mexican airline Grupo Aeromexico SAB de CV has filed a reorganization plan that includes a financing proposal widely supported by a group of senior bondholders and unsecured creditors and allows the carrier to get rid of $ 1 billion in debt.

In court papers Filed Friday evening, Aeromexico said it continued to “actively negotiate with various stakeholders regarding an exit financing plan” based on the joint proposal from ticket holders and trade creditors to provide as much support as possible to creditors for the plan.

The airline, represented by Davis Polk & Wardwell, filed for Chapter 11 in June 2020 with $ 2 billion in debt, blaming slowing travel demand caused by the COVID-19 pandemic.

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Aeromexico is considering asking U.S. Bankruptcy Judge Shelley Chapman in Manhattan to allow it to begin soliciting creditors’ votes on the plan in a hearing on October 25.

The joint proposal includes $ 1.1875 billion in new equity and $ 537.5 million in new secured debt. The new funding would be used to refinance or repay some or all of the $ 1 billion loans used to fund operations during the bankruptcy. It would also be used to cover the necessary costs arising from Chapter 11, to set up an opt-out option for general unsecured creditors and to acquire Aimia Holdings UK Ltd’s stake in the airline’s loyalty program, PLM Premier.

The joint proposal puts the total value of Aeromexico’s business at $ 5.4 billion. Aeromexico says the plan would save nearly 13,000 jobs worldwide.

The carrier says it received three proposals to fund its exit from bankruptcy this summer, two of which came from noteholders and commercial creditors and were ultimately combined into one. The third proposal was submitted by Apollo Global Management Inc, which provided the $ 1 billion loan to fund operations during the bankruptcy.

Although initially recommending the Apollo offer to its board of directors, Aeromexico said in documents filed Friday that the joint proposal “would bring the greatest value to its creditors and position the company for profitability and profitability. long-term growth “.

Mediation between the parties is ongoing, according to the disclosure statement.

VR Global Partners LP is the largest debt holder in the group of ad hoc senior note holders with $ 95 million in notes as of September 17, according to court documents. Nut Tree Capital Management LP, with $ 150 million in unsecured debt, is the largest member of the ad hoc unsecured group of creditors.

The official Unsecured Creditors Committee, represented by Willkie Farr & Gallagher, is separate from the unsecured group involved in the joint proposal.

Aeromexico was one of three major Latin American airlines to file for bankruptcy in the United States in 2020, alongside Colombian Avianca SA and Chilean LATAM Airlines Group SA.

The airline hopes to hold a hearing on its draft plan on November 29 before Chapman.

The case is In re Grupo Aeromexico SAB de CV, US Bankruptcy Court, Southern District of New York, No. 20-11563.

For Debtors: Marshall Huebner, Timothy Graulich and James McClammy of Davis Polk & Wardwell; and Derek Abbott and Andrew Remming of Morris Nichols Arsht & Tunnell

For the ad hoc group of senior noteholders: David Botter, Abid Qureshi and Jason Rubin from Akin Gump Strauss Hauer & Feld

For the ad hoc group of unsecured creditors: Joshua Brody, Scott Greenberg and Matthew Williams of Gibson, Dunn & Crutcher

Read more:

Aeromexico share increases by more than 3% following submission of restructuring plan

Grupo Aeromexico offers to buy PLM shares for $ 180 million from Canadian AIMIA

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