Grupo Aeromexico files DIP motion for $1 billion of loan financing

Chicago, Aug. 13 – Grupo Aeromexico SAB de CV filed a DIP financing motion in the U.S. Bankruptcy Court for the Southern District of New York on Thursday, according to a press release.

Commitments for the facility have been obtained for a $1 billion senior secured superpriority multitranche term loan with funds managed by affiliates of Apollo Global Management Inc.

The facility specifically consists of a $200 million tranche 1 facility and an $800 million tranche 2 facility.

Subject to certain milestones, covenants and conditions agreed with the DIP lenders, up to $100 million of the tranche 1 DIP loans will be made available upon the date of entry of an order by the court.

Upon final approval from the court of the DIP facility and the fulfillment of other conditions, the undrawn portion of the tranche 1 facility will be available in a single draw and the tranche 2 loans will be made available in an initial draw of $175 million, and then subject to the fulfillment of additional conditions and milestones, subsequent draws in minimum amounts of $100 million.

The terms of the DIP Facility require that Aeromexico enters into a shareholder support agreement with a majority of its shareholders, representing approximately 75% of its capital stock, including Delta Airlines, under which such supporting shareholders shall vote in favor of a capital increase to effectuate, if applicable, the conversion of the tranche 2 DIP Facility, including waiving their preemptive rights and submit themselves to the jurisdiction of the bankruptcy court with respect to the scope and terms of such shareholders support agreement, and agree not to sell their shares during the chapter 11 process.

It is anticipated that with the capital increase these shareholders will be diluted by not exercising their preemptive rights, so that their remaining equity stake could be very limited. Other shareholders within the general investor community will be allowed to exercise their preemptive rights subject to several factors that are yet to be determined.

The tranche 2 facility may be converted, at the lenders’ option, into shares of reorganized Aeromexico.

Proceeds can only be used for certain permitted expenses, including certain working capital expenses and general corporate purposes, as well as restructuring costs.

Grupo Aeromexico, a holding company for commercial aviation, is based in Mexico City. The company filed Chapter 11 on June 30 under case number 20-11563.

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