Grupo Aeromexico Reorganization Plan Rests on New Equity, Debt Financing

Mexican airline Grupo Aeromexico SAB de CV has filed a reorganization plan that includes a financing proposal largely backed by a group of senior noteholders and unsecured creditors and allow the carrier to shed $1 billion from its debt stack, Reuters reported. In court papers filed late Friday, Aeromexico says it is continuing to “actively negotiate with various stakeholders regarding an exit financing package” based on the noteholders and trade creditors’ joint proposal to bring in as much creditor support for the plan as possible. The airline, represented by Davis Polk & Wardwell, filed for chapter 11 in June 2020 with $2 billion in debt, blaming the downturn in travel demand caused by the COVID-19 pandemic. Aeromexico plans to ask U.S. Bankruptcy Judge Shelley Chapman in Manhattan to grant approval for it to begin soliciting creditor votes on the plan at a hearing on Oct. 25. The joint proposal includes $1.1875 billion in new equity and $537.5 million in new secured debt. The new financing would be used to refinance or pay off all or some of $1 billion in loans used to fund operations during the bankruptcy. It would also be used to cover costs necessary to emerge from chapter 11, to set up a cash-out option for general unsecured creditors and acquire Aimia Holdings UK Ltd’s interest in the airline's travel loyalty program, PLM Premier. The joint proposal puts Aeromexico's total enterprise value at $5.4 billion. Aeromexico says the plan would save nearly 13,000 jobs worldwide. Read more.