Shares of Avianca Holdings SA have tumbled 45% over the past week as the Colombian airline prepares a bankruptcy exit plan that will likely make the stock worthless, Bloomberg News reported. The air carrier, which was driven into chapter 11 during last year’s pandemic and travel bans, fell 6% in Bogota trading Monday, extending losses for a fifth day, according to data compiled by Bloomberg. Shares were trading around 119 pesos (about 3 cents) on Monday. A U.S.
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Colombia
Colombia’s flag carrier Avianca has submitted a reorganisation plan to a US bankruptcy court, Flight Global reported. The Bogota-based airline’s plan, submitted to the bankruptcy court for the Southern District of New York on 10 August, outlines its obligations to creditors and the settlement of claims. It says a new strategy will help it simplify operations and position Avianca to thrive in the Latin American market. Avianca and its Latin American peers Aeromexico and LATAM Airlines declared bankruptcy last year after the coronavirus decimated global air travel demand.
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Bankrupt units of a Mexican and Colombian payroll lender have secured court approval to access part of a $45 million loan to fund operations during their chapter 11 case after agreeing to install a chief restructuring officer, Reuters reported. During a virtual hearing on Wednesday, U.S. Bankruptcy Judge Kate Stickles in Wilmington, Del., signed off on Alpha Latam Management LLC's request to tap $17.5 million of the full loan. A hearing on the rest of the loan will be held at a later date. ALM is an affiliate of Mexico’s Alpha Holding SA de CV, which is not part of the chapter 11 case.
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Creditors said that Alpha defaulted earlier this year when the privately held nonbank lender disclosed accounting errors in its Mexican segment, sending its bond prices tumbling, WSJ Pro Bankruptcy reported. Alpha has $768.4 million in debt, mostly unsecured bonds, and has lined up $45 million in emergency financing to get through chapter 11 proceedings in the U.S. Bankruptcy Court in Wilmington, Del. The Mexican segment didn’t file for bankruptcy.
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Colombian airline Avianca obtained financial commitments for US$1.6 billion to finance its exit from chapter 11 bankruptcy law as part of its reorganization, The Rio Times reported. "As a result of the continued support of its creditors, Avianca Holdings filed a motion with the bankruptcy court seeking approval of the terms of the commitment letters for its US$1.6 billion chapter 11 exit financing," the airline said in a statement. Avianca is the largest airline in Colombia and second largest in Latin America, after LATAM of Chile.
Colombia’s government formally presented a $3.95 billion tax-reform bill to congress, even as unions and student groups sought to revive the street protests that helped scupper the reform’s original iteration, Reuters reported. The law would raise 15.2 trillion pesos per year, significantly less than the 23.4 trillion pesos sought by the government in an April proposal that was later withdrawn amid sometimes-deadly protests and lawmaker opposition.
Colombia may start relying more heavily on shorter-term debt sales to cover its budget shortfalls, seeking to drive down interest costs after a failed tax-reform push triggered social unrest and sent yields higher. Yields on longer-term bonds fell, Bloomberg News reported. Public Credit Director Cesar Arias, a Finance Ministry official who is in charge of the government’s borrowing, said in an interview that he will begin to discuss with investors whether to scale back the maturities on some of the bonds it sells at auction.
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Colombia’s dollar bonds dropped and the peso led losses among emerging-market currencies after S&P Global Ratings cut the country’s credit rating to junk amid a political crisis and mass unrest, Bloomberg News reported. The nation’s dollar-denominated bonds due 2031 dropped 0.4% to 96.7 cents in early New York trading Thursday, sending their spread over U.S. Treasuries up to 1.84 percentage points. The peso weakened 2% to 3,760 per dollar.
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Avianca Holdings SA plans to raise $1.8 billion to repay debt and provide new financing as the Colombian airline eyes an exit from the bankruptcy reorganization it was forced into last year during the pandemic-driven travel collapse, Bloomberg News reported. The air carrier retained Seabury Securities LLC to help raise the exit financing, likely a combination of debt and equity, the company said in a regulatory filing Wednesday. Avianca said it will repay $1.4 billion in bankruptcy loans and have around $1 billion in liquidity when it emerges from the reorganization at some point this year.
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Net losses at airline Avianca Holdings increased 22% to $1.09 billion in 2020, due to the near-paralysis of global air travel because of COVID-19, Reuters reported. The airline, which is carrying out a restructuring process under the chapter 11 bankruptcy law, had losses of $894 million in 2019. Operations contracted 74% year-on-year, the airline said in a filing to Colombia’s financial regulator, while operating income was down to $1.71 billion, from $4.62 billion in 2019.
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