Aeromexico announces details of upcoming public tender offer

By Sarah Lizee

Olympia, Wash., Dec. 16 – Grupo Aeromexico, SAB de CV said a public tender offer will be launched by a third party to give existing shareholders an option to withdraw from the current capital stock before the upcoming equitization of debt and new contributions into the capital stock, which will substantially dilute the current shares following the company’s emergence from Chapter 11.

A company not related to Aeromexico will initiate the proceedings before the National Banking and Securities Commission (Comision Nacional Bancaria y de Valores) and the Mexican Securities Exchange (Bolsa Mexicana de Valores) to make the voluntary tender offer.

The offering will be made at one Mexican cent for each Mexican peso, for each of Aeromexico's outstanding shares.

Delta Airlines, Inc. will not participate in the offering, so a maximum of 331.48 million shares are expected to be acquired, which would represent up to 49% of the capital stock prior to the dilution effects. Those shares jointly represent, at the end of the offer and once the Chapter 11 plan becomes effective, less than 0.01% of the total future new shares representing the capital stock of the company, given the dilution to be derived from the capitalization of debt and new capital stock contributions and eventual subscription by other shareholders and investors.

Within the new shareholders will be the group of strategic Mexican shareholders with 4.1%, Apollo with 22.38%, Delta Airlines with 20%, and the remaining shares distributed among all new investors and creditors that capitalize their recognized claims in shares representing Aeromexico's future capital stock.

The offer will be sponsored with funds of the bidder, coordinated with Aeromexico, and subject to a schedule that allows Aeromexico's existing shareholders to have an opportunity to sell their shares through the securities market before the effectiveness of the plan and of the resolutions to be adopted by the shareholders meeting regarding the transactions.

DIP financing, conversion option

As previously reported, as part of the company’s financial restructuring process, the company had entered into a $1 billion DIP financing package with funds managed by affiliates of Apollo Global Management Inc.

The DIP financing was comprised of a $200 million senior secured tranche 1 and an $800 million senior secured tranche 2. Tranche 2 provided an option for each tranche creditor to convert its debt into new shares of Aeromexico's capital stock.

The company said that Apollo is not the only creditor under the DIP financing and there are several creditors, holders of collection rights derived from the tranche 2 financing, that opted to convert all or part of their claims into new shares of Aeromexico.

The company added that it expects that Delta will end up holding about 20% of its capital stock following the transactions.

Once the plan becomes effective, existing shareholders will be almost completely diluted, so that their remaining shareholding is likely to be minimal, if any, and the value expectations with respect to their current shareholding positions may be close to zero, Aeromexico said.

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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