Aeromexico gets approval to enter exit financing commitment letters

By Sarah Lizee

Olympia, Wash., Dec. 7 – Grupo Aeromexico, SAB de CV received approval to enter into the equity and debt exit financing commitment letters relating to its joint financing proposal from lenders under tranche 2 of the company's debtor-in-possession financing facility, some existing creditors and new money investors, according to a press release.

The so-called “alliance proposal” includes the support of strategic partner Delta Air Lines and a group of long-term Mexican investors so as to comply with foreign ownership requirements.

The company said it anticipates launching solicitation on the Chapter 11 plan following entry of the order approving the disclosure statement.

The U.S. Bankruptcy Court for the Southern District of New York set a confirmation hearing on the plan for Jan. 18.

Plan terms

Under the plan, about $1.3 billion of financing will be raised. The committed parties, excluding Delta and the Mexican investor group, will purchase or fund $600 million in new equity, representing 26.9% of all new issued shares, and $762.5 million in senior secured first-lien notes. About $575 million of the notes will be used to repay tranche 1 of the DIP facility, to fund working capital and for general corporate purposes, and to fund cash distributions to unsecured creditors.

Delta will subscribe and pay for $100 million of new shares and will be required to convert all fully accrued amounts of its tranche 2 loans into new shares at plan equity value. In exchange, Delta will get 20% of all new shares issued under the plan. Also, any or all portions of Delta’s claims against the debtors will be allowed and satisfied under the Chapter 11 plan, and any distributions of new shares on those claims will be added to Delta’s ownership interest.

Apollo Management Holdings will get $150 million in cash, accrued interest under the DIP credit agreement on the outstanding debt under the tranche 2 loans starting on Dec. 31, and 22.38% of all new shares.

Mexican Pension Fund tranche 2 DIP loans will be converted into 3.54% of all new shares.

A cash pool of $450 million will be distributed to unsecured creditors.

Grupo Aeromexico, a holding company for commercial aviation, is based in Mexico City. The company filed Chapter 11 on June 30, 2020 in the U.S. Bankruptcy Court for the Southern District of New York under case number 20-11563.

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