Avianca Holdings will exchange $475.2 million in bonds as part of a plan to change its financial fortunes.
Avianca Holdings has said that 86.4% of the outstanding principal of its $550 million bonds due May 2020 have been validly tendered.
In a statement to Colombia’s financial regulator, Avianca said it would extend the deadline for bondholders to exchange their paper until 25 September, in a bid to exchange a total of $550 million worth of bonds coming due next year.
The airline, which is owned by United Airlines and Kingsland Holdings Limited, is set to change its capital structure amid ongoing financial problems.
Adrián Neuhauser, chief financial officer at Avianca, commented: "We are very grateful for the broad participation achieved in the exchange. The high percentage of bonds tendered demonstrates our bondholders' confidence in the company's long-term plan, focused on reducing leverage levels, increasing cash flow, and optimising profitability and operational efficiency."
John Gebo, United's senior vice president of Alliances, has moved to congratulate Avianca Holdings on successfully achieving the exchange of 86.4% of the outstanding principal amount of the May 2020 bonds.
He said: "We are also pleased to confirm that this achievement is sufficient to satisfy United's requirement for the exchange of these May 2020 bonds, regarding our previously announced offer, together with Kingsland, to loan $250 million to Avianca Holdings. Our loan remains contingent on certain other conditions being met by Avianca Holdings, including certain commitments and waivers made by other stakeholders."
As part of the agreement, all participating bondholders will receive secured notes as described in the exchange offer memorandum. In addition, such notes will automatically exchange for new notes with a three-year extended maturity and a 9% coupon, subject to completion of a $250 million financing led by United Airlines and Kingsland Holdings Limited in Avianca.