Avianca Holdings has reached an agreement with United Airlines and Kingsland Holdings in regards to a $250 million financing loan.
United and Kingsland have agreed to provide Avianca a four-year loan at an interest rate of 3%; interest will be paid-in-kind until maturity, granting Avianca greater financial flexibility.
The loan will convert into shares at Avianca's option – at an equivalent price per share of $4.6217, representing a 35% premium over the 90-day weighted average price through October 3 – subject to certain conditions, including AVH's share price consistently trading above seven dollars.
Avianca has been active recently in trying to gain new funds. In September, it exchanged $475.2 million in bonds as part of a plan to change its financial fortunes.
Earlier in the same month, the company gained a short term financing loan of $50 million from Kingsland Holdings in a bid to ensure its strategic plan continues on track.
Drafting of final documentation is ongoing and is expected to be executed by mid-October. Funding remains subject to certain other conditions, including the successful conclusion of Avianca's debt reprofiling plan in a manner consistent with the Avianca 2021 plan, as well as the closing of the company's exchange offer for its $550 million 2020 bond.
John Gebo, United's senior vice president of Alliances, said: "United congratulates Avianca Holdings on this important step in its Avianca 2021 plan. We look forward to Avianca's successful achievement of agreements with its other stakeholders, and to working together with Avianca to complete final documentation for our loan."
The CFO of Avianca Holdings S.A., Adrian Neuhauser has said that the agreement represented another "crucial step" in the company's Avianca 2021 financial plan.
"We believe the terms we have agreed to are very attractive, and we are grateful for the confidence United and Kingsland continue to place in the company and its management."
Avianca continues to work on quickly finalising negotiations with its creditors and fulfilling the conditions necessary to conclude the bond exchange offer, in order to expeditiously close the stakeholder loan.
Once this process is concluded, Avianca expects to offer its preferred shareholders the opportunity to participate in $125 million financing under similar conditions.