Relevant Document:ReleaseAvianca Holdings announced the company has reached an agreement with United Airlines and Kingsland Holdings regarding the terms of United and Kingsland's proposed financing to AVH of up to $250 million, and established the conditions precedent to the transaction.
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.
According to the release, 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 Oct. 3– subject to certain conditions, including AVH's share price consistently trading above seven dollars; the loan may also be converted into shares voluntarily at the discretion of United Airlines and Kingsland Holdings.
Avianca's shares last traded at $3.59 on the New York Stock Exchange at market close on Oct. 4.
The financing will be secured by a pledge of stock in AVH's major subsidiaries.
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.
The release added that once this process has concluded, Avianca expects to offer its preferred shareholders the opportunity to participate in a $125 million financing under similar conditions.