Swissport Launches Scheme, Consent Solicitation to Secure Amendments to Incur up to €380M Super-Senior Debt; Supportive Ad-Hoc Group has 34% of Loans, 56% of SSNs; 6M-9M Liquidity Need at €250M-€350M; 14M-18M Liquidity Need at €600M-€700M; EBITDA to Return to Pre-Covid-19 Levels in 2022

Relevant Documents:
Scheme, Consent Solicitation Announcement
Investor Update

Swissport has commenced a process to amend certain covenants and other provisions under the credit agreement dated as of Aug. 14, 2019, the indenture relating to the €410 million 5.25% senior secured notes due 2024, and the intercreditor agreement dated as of Aug. 14, 2019. This is in order to increase Swissport’s flexibility to incur additional indebtedness on a super-senior basis and avoid any breach of its obligations under certain of its existing financing agreements.

Capital structure as of March looked as follows:

Swissport Group has already launched a waiver, consent, and amendment request to seek to effectuate and enable certain changes to be made to the credit agreement and the intercreditor agreement as communicated on May 20. All amendments requiring consent of the majority of the lenders under the credit agreement were obtained, and a waiver requiring consent of the majority of the revolving lenders under the credit agreement was obtained.

In order to obtain the amendments requiring consent of 100% of the lenders, Swissport announced the launch of a scheme of arrangement by Swissport Fuelling Ltd. pursuant to the UK Companies Act 2006 relating to the credit agreement and the intercreditor agreement in order to make such required amendments. However, Swissport intends to keep the waiver, consent and amendment process launched on May 20 open in parallel with the scheme with a view to potentially being able to implement certain required changes to the credit agreement and the intercreditor agreement, for which unanimous consent of the Lenders is required, outside of the Scheme. If the unanimous consent of the lenders is obtained, the scheme would no longer be needed.

Swissport also announced the launch of a consent solicitation by Swissport Financing S.à r.l. relating to the senior secured notes indenture and the intercreditor agreement in order to make such corresponding amendments.

Swissport has been informed that the scheme and the solicitation have the support of an ad hoc group of senior secured creditors, which as at May 26 held approximately 34% in aggregate principal amount of the loans and commitments under the credit agreement as lender of record and approximately 56% of the senior secured notes. The ad hoc group includes funds such as Apollo, Ares, Carlyle, SVP, Barclays, Cross Ocean and King Street, sources said. Apollo has the biggest position among these funds.

As mentioned on May 20, Swissport’s liquidity position as of May 15 was over €350 million in cash. However, Swissport Group is still seeking significant additional financing to address upcoming liquidity shortfalls it is facing due to the Covid-19 pandemic.

Swissport Fuelling Ltd. issued a practice statement letter with the purpose to provide details on the objectives of the scheme and to notify the scheme creditors that the scheme company intends to apply to and appear before the High Court of Justice of England and Wales on or around June 5 for orders granting permission to convene a meeting of the scheme creditors for the purpose of considering and approving the scheme.

Swissport Fuelling Ltd. is proposing the scheme in order to implement certain amendments to the following:

• An amendment to the intercreditor agreement required to permit Swissport to secure, subject to certain conditions, indebtedness on a super senior priority basis to the liens securing the facilities under the credit agreement and the senior secured notes, and

• Amendments to reduce the consent thresholds required to;

• Change the identity of the revolving borrower from all lenders consent to all revolving lenders consent, and

• To change the governing law and submission to jurisdiction.

Further details on the scheme and the proposed amendments are contained in the practice statement letter.

The issuer also announced that it is soliciting consents from holders of the senior secured notes to approve amendments to certain provisions of the following:

• Certain provisions of the intercreditor agreement required to permit Swissport to secure, subject to certain conditions, indebtedness on super senior priority basis to the liens securing the facilities under the credit agreement and the senior secured notes, and

• The senior secured notes indenture to permit Swissport to secure indebtedness by the collateral on super senior priority basis to the liens securing the facilities under the credit agreement and the senior secured notes, subject to the following conditions;

• The aggregate principal amount outstanding of such super senior indebtedness shall not exceed €380 million;

• The terms, covenants and other provisions of such super senior indebtedness on the date of the initial incurrence thereof shall be acceptable to the lenders and the holders that in aggregate hold a majority of the aggregate principal obligations and commitments under the credit agreement and the senior secured notes, taken together; and

• Each of the holders and each of the lenders shall be afforded the right to participate in any such super senior indebtedness on a rateable basis up to its pro rata share.

Adoption of the proposed amendments under the senior secured notes indenture and the intercreditor agreement requires the consent of the holders of at least a majority in aggregate principal amount of the then outstanding senior secured notes.

The solicitation will expire at 4:00 p.m. BST on June 4.

Swissport highlighted value creation opportunities and impacts of Covid-19 on the group and its liquidity in the investor update.

Covid-19 is expected to have a “significant adverse impact” on revenue over the next 12 to 18 months and management has taken significant action to mitigate this through labor reductions, other cost reductions, and cash actions and deferrals.


The company has an immediate liquidity need of €250 million to €350 million to cover the next six to nine months.


There is a €600 million to €700 million need over the next 14 to 18 months to offset EBITDA impacts and reestablish working capital. The forecast period runs through the end of 2021 with minimum liquidity point being reached between July 2021 and October 2021


The roughly €300 million post funding cash balance provides around €150 million to €200 million in general operating liquidity and around €100 million to €150 million for investment, including the “ONE Swissport” program discussed below.

Change in top line and components of the group’s cost structure looks as follows:


Swissport views on air travel recovery contemplate gradual easing of restrictions from May with resumption of travel from May to early June onwards, with there being no second wave with widespread lock-downs or travel restrictions. Recovery in air travel is expected over 12 to 18 months due to continuation of some travel restrictions and lasting impact on business and consumer behaviour.

Volumes of the company, or aircraft turns, are expected to be stronger than passenger numbers due to the industry characteristics.

Impact on the industry is expected to be lasting with the industry returning back to normal growth levels in the medium-term but from a smaller base. Crisis is expected to result in further consolidation in airline and service providers, potentially presenting opportunities.

In terms of long term growth prospects, Swissport noted that the ground handling market fundamentals are strong and “flight to quality” could benefit larger and more international players and accelerate the trend of increasing outsourcing services. Swissport is expected to return to similar profitability post-crisis with pre-Covid-19 EBITDA levels expected to be achieved again in 2022. Longer-term growth and the “ONE Swissport” program are forecast to increase EBITDA by more than €150 million with EBITDA preliminarily forecast to reach about €430 million by 2025.


The “ONE Swissport” opportunity and the associated timeline was summarized as follows by the company:

 

Summary of key terms of Swissports PIK loan due 2023 is below: