Aeromexico obtained, subject to court approval, commitments for a $1 billion senior secured superpriority multi-tranche debtor-in-possession term loan facility from funds managed by affiliates of Apollo Global Management.
The DIP facility consists of a senior secured tranche one facility of $200 million and a senior secured tranche two facility of $800 million. Proceeds from the DIP Facility may only be used for certain permitted expenses, including certain working capital expenses and general corporate purposes, as well as restructuring costs.
Aeromexico filed this DIP financing motion before H. Judge Shelley C. Chapman of the United States Bankruptcy Court for the Southern District of New York as a follow-up to the financial restructuring process initiated on June 30.
“This is a critical milestone in the ongoing process to transform our company with the goal of driving long-term, sustainable growth for Aeromexico,” Andrés Conesa, CEO of Aeromexico, said. “Throughout this process, we will continue to provide our customers with the exceptional service and flight experience they expect from Aeromexico, and we will continue all day-to-day operations, albeit under these extraordinary COVID-19-related circumstances. This milestone is a recognition of Aeromexico’s fundamentally solid operating business and proven strategy.”
Subject to the fulfillment, in each case, of certain milestones, covenants and conditions precedent agreed with the DIP lenders, (i) upon the date of entry of an order by the court granting interim approval of the DIP facility and fulfillment of other conditions, up to $100 million of the tranche one DIP loans will be made available; and (ii) upon the date of entry of an order by the bankruptcy court granting final approval of the DIP facility and fulfillment of other conditions, the undrawn portion of the tranche one facility will be available in a single draw, and the tranche two DIP loans will be made available in an initial draw of $175 million, and, subject to the fulfilment of certain additional conditions and milestones, subsequent draws in minimum amounts of $100 million.
The DIP facility, which is still subject to the bankruptcy court approval, the execution of definitive credit and ancillary agreements, and the fulfillment of certain conditions for funding of the separate two tranches, will provide Aeromexico with liquidity to meet its future obligations in a timely and orderly fashion, and to continue with operations during and after the voluntary restructuring process.
The tranche two DIP facility may be converted, at the lenders’ option, into shares of reorganized Aeromexico, provided that the exercise of such equity conversion option will be subject to certain conditions and, in due course, to the corporate and regulatory approvals for the issuance of the corresponding shares including by Aeromexico’s general shareholders.
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 (i) shall vote, in due course, in favor of a capital increase to effectuate, if applicable, the conversion of the tranche two DIP facility, including waiving their preemptive rights; (ii) submit themselves to the jurisdiction of the bankruptcy court with respect to the scope and terms of such shareholders support agreement, and (iii) 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.
