Report of Foreign Issuer (6-k)
14 August 2020 - 1:51AM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20546
FORM 6-K
REPORT OF
FOREIGN PRIVATE ISSUER
PURSUANT TO
RULE 13a-16 OR 15d-16
UNDER THE U.S.
SECURITIES EXCHANGE ACT OF 1934
For the month of August 2020
Commission File Number: 001-36142
Avianca Holdings S.A.
(Name of registrant)
Edificio P.H.
ARIFA, Pisos 9 y 10, Boulevard Oeste
Santa María Business District
Panama City, Republic of Panama
(+507) 205-7000
(Address of principal executive office)
Indicate by
check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒
Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
Avianca Holdings S.A. (Avianca or the Company) today provided an update on the
Companys Chapter 11 reorganization process and its evaluation of potential debtor-in-possession (DIP) financing.
As previously disclosed, since
Aviancas Chapter 11 filing on May 10, 2020, the Company has been utilizing its cash on hand, combined with funds generated from its ongoing operations (such as cargo), to support the business during the court-supervised reorganization process.
During this interim period, the Company has been working with its advisors led by Seabury Securities LLC, a U.S. investment bank to put in place a DIP financing structure.
Aviancas proposed DIP financing structure consists of a Tranche A senior loan and a Tranche B subordinated loan, under which the Company seeks to obtain
a total of approximately US$ 1.2 billion of new funds (US$ 900 million of Tranche A and US$ 316 million of Tranche B) excluding any rollups of existing debt and purchase consideration. Total DIP facilities inclusive of rollup consideration will be
US$ 2.0 billion, consisting of a US$ 1.3 billion Tranche A and a US$ 700 million Tranche B. Both tranches will be secured ratably by a lien on all available collateral, with the Tranche B subordinated in right of repayment to the Tranche A.
Avianca has now reached key agreements (subject to definitive documentation, the requisite consents and approvals from the relevant entities, U.S. Bankruptcy
Court approval and other customary conditions), with various parties that are providing substantial funding towards such DIP loans. These agreements (described in detail below) will allow the Company to offer prospective lenders a significantly
enhanced collateral pool of assets to secure all of the DIP loans.
Goldman Sachs Lending Partners LLC and JPMorgan Chase Bank, N.A. have been engaged by
Avianca (subject to U.S. Bankruptcy Court approval) to serve as co-lead arrangers and joint physical bookrunners of the Tranche A DIP Loans. The providers of this financing may include certain of Aviancas existing lenders, other prospective
third-party lenders, and possibly the government of Colombia. Additional information about the potential financing will be posted on Aviancas website (www.aviancaholdings.com).
Key DIP Agreements to Date
The three key agreements that
have been reached, as integral elements of the securing the US$ 1.2 billion of new DIP financing, are as follows:
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Aviancas Tranche B DIP financing (the Tranche B DIP Facility) will include funding from its
existing stakeholder lenders as well as new investors (the Tranche B DIP Lenders) consisting of US$ 316 million of new money financing and a rollup of approximately US$ 384 million of secured convertible debt issued in December 2019 and
January 2020 (the Stakeholder Facility). The property that currently secures the existing Stakeholder Facility Aviancas 70% equity interest in LifeMiles, as well as certain COP-denominated credit card receivables will
now be available to secure the DIP financing.
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Seabury Securities LLC continues to lead a robust process to provide additional market participants the
opportunity to participate in the Tranche B DIP Facility.
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Avianca also has reached an agreement in principle with an ad hoc group of holders of Aviancas 2023 senior
secured notes (the Notes); this agreement will be memorialized in a restructuring support agreement (RSA) between Avianca and holders of a majority of the Notes. Pursuant to the RSA, all holders of the Notes will have an
opportunity to provide up to US$ 250 million of new money commitments to the Tranche A DIP, with certain holders of Notes agreeing to backstop US$ 200 million. The RSA provides that holders of Notes who become a party to the RSA will have the
opportunity to rollup a portion of their Notes into the Tranche A DIP, with the aggregate amount of rollup equal to US$ 220 million of the Tranche A DIP. The RSA also provides for the collateral presently pledged to secure the notes, including
Aviancas trademarks, certain freighter aircraft and Aviancas residual equity interest in certain pools of aircraft, to be pledged on a senior secured priming basis as additional collateral to secure the DIP loans.
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In addition, Avianca has reached an agreement in principle with AI Loyalty (Cayman) Limited (AI
Loyalty), holder of a 30% ownership stake in Aviancas loyalty company, LifeMiles Ltd. (LifeMiles), to (i) acquire 19.9% of LifeMiles equity, currently held by AI Loyalty for a combination of cash and Tranche A DIP loans and
(ii) receive a call option to acquire AI Loyaltys remaining equity stake in LifeMiles for cash. As a result of this agreement, Avianca will own 89.9% of LifeMiles upon the closing of the transaction, with a path toward ultimately owning 100%
of LifeMiles. These incremental stakes in LifeMiles will also be available as collateral to secure the DIP facility.
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As a result of
putting in place these three important agreements, Avianca is now in a position to offer to prospective DIP lending parties a much-enhanced collateral pool of assets to secure such DIP loans. Importantly, each of the foregoing agreements is subject
to higher and better offers as Avianca continues to engage in a robust marketing process to secure a financing package on the best available terms.
As
the Company continues to develop its reorganization plan, Avianca expects to fully address the current industry landscape and the effects of COVID-19, transforming the Company into a highly competitive, right-sized, solidly profitable airline.
Pursuant to the requirements of the U.S. Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: August 13, 2020
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AVIANCA HOLDINGS S.A.
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By:
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/s/ Richard Galindo
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Name:
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Richard Galindo
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Title:
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General Secretary
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