Colombia to Lend up to $370 Million to Avianca in Bankruptcy
(Bloomberg) -- Colombia’s disaster fund will lend as much as $370 million to Avianca Holdings SA to help with its restructuring after a halt in travel during the Covid-19 pandemic forced the company into bankruptcy, the country’s finance ministry said in a statement.
The emergency mitigation fund’s committee approved the government-backed loan, due November 2021, under the framework of debtor-in-possession financing the company is seeking in its U.S. bankruptcy court case, the ministry said in a statement on Friday.
Avianca, one of the biggest airlines in Latin America, filed for Chapter 11 protection in New York in May after travel bans forced the airline to ground its fleet. It reached an agreement with lenders this month for a substantial part of the $2 billion it’s trying to raise as it restructures. The company is offering one of the highest premiums yet seen on a $1.3 billion debtor-in-possession loan.
“We are pleased that the Government of the Republic of Colombia will participate in the company’s DIP financing and express our gratitude for the confidence and support this commitment demonstrates,” Avianca said in a statement Sunday. The airline’s DIP loan structure has been well-received by third-party institutional investors, it said.
The slump in demand for air travel has also forced competitors Latam Airlines Group SA and Grupo Aeromexico SAB to seek bankruptcy protection as the region’s carriers navigate the coronavirus crisis without substantial government aid, unlike counterparts in the U.S. and Europe.
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