Avianca Offers To Swap Secured For Unsecured Debt
Avianca Holdings S.A. (NYSE: AVH) (BVC: PFAVH) this morning announced in a 6-K filing with the United States Securities and Exchange Commission, in connection with its previously announced re-profiling plan for its capital structure, the commencement of an offer, outside of Colombia, to exchange any and all $550 million of its existing 8.375% Senior Notes due for up to $550 million of new 8.375% Senior Secured Notes due 2020. Concurrently with the exchange offer, the airline is soliciting consents to certain proposed amendments and waivers with respect to restrictive covenants, events of default and other provisions in the indenture governing the existing notes. The exchange offer and consent solicitation are being made pursuant to the terms and subject to the conditions as set forth in an Offering Memorandum and Consent Solicitation Statement dated August 14, 2019.
Eligible holders of existing notes who tender existing notes prior to 11:59 p.m. New York City time, on August 27, 2019 will be eligible to receive, for each $1,000 principal amount of existing notes tendered, $1,000 principal amount of exchange notes, which includes the “ Early Participation Premium ” of $50 in principal amount of exchange notes per $1,000 principal amount of existing notes. Eligible holders who validly tender existing notes after the early participation deadline will not be eligible to receive the early participation premium. The exchange offer and consent solicitation will expire at 11:59 p.m. New York City time, on September 11, 2019, unless extended or earlier terminated.
The exchange notes will be secured by a pledge, mortgage or assignment of:
- The Avianca brand and certain other intellectual property
- Certain unencumbered aircraft which are currently owned by certain subsidiaries of Avianca
- The residual interest in substantially all aircraft which are owned and financed now or in the future by Avianca and its subsidiaries, except for aircraft currently expected to be sold and aircraft subject to third party leases.
The aggregate value of the collateral aircraft (calculated according to multiple desktop valuations using the half-life method), net of the aggregate amount of outstanding indebtedness under financing arrangements with respect to such aircraft, is approximately $1.0 billion USD.
The exchange notes will be issued by the company and will be guaranteed by all of the guarantors and the co-issuers of the existing notes and will additionally be guaranteed by various subsidiaries which do not guarantee the existing notes.
The exchange notes will have the same maturity and other terms as the existing notes, except that:
- The exchange notes will be secured
- The exchange notes will have additional guarantors
- A cross-acceleration provision will be substituted for the cross-default provision
- United Airlines, Inc. and Kingsland Holdings Limited (Controlled by current Avianca chairman Roberto Kriete) will be designated as the permitted holders under the change of control provisions
- The exchange notes will be subject to the Mandatory Exchange, described below
The exchange notes will automatically be exchanged (the “ Mandatory Exchange ”) for an equivalent principal amount of 9.00% Senior Secured Notes due 2023 (the “ New Notes ” and, collectively with the exchange notes, the “ Secured Notes ”) on December 31, 2019 upon the certification by Avianca to the trustee of the closing of an investment of not less than $250 million of new equity or convertible debt in the Company from United, Kingsland and one or more financial institutions, of which at least $200 million will be made by United and Kingsland (the “ Stakeholder Investment ”) and the receipt of such funds prior to December 31, 2019.
The new notes will have terms that are identical to the terms of the exchange notes, except that:
- The coupon on the New Notes will be 9.00% per annum
- The maturity date of the New Notes will be May 10, 2023
- The new notes will be redeemable as further described in the offering memorandum
- The collateral for the new notes will be subject to release upon the new notes achieving certain ratings.
The exchange offer and consent solicitation will be conditioned on there being validly tendered and not withdrawn at least 50.1% of the aggregate principal amount of the existing notes. However, United and Kingsland have informed Avianca that participation of 50.1% in the exchange offer will not be sufficient for them to consummate the stakeholder investment.
The full 6-K filing to the Securities and Exchange Commission of the US can be seen here.
Send to KindleComments
