Aeromexico Files DIP Financing Motion

Grupo Aeromexico formalizes commitments for up to US$1,000 million of DIP financing subject to Court approval. The DIP financing will allow Aeromexico to maintain adequate liquidity to complete its chapter 11 restructuring process

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Grupo Aeromexico S.A.B. de C.V.

Aug 13, 2020, 18:35 ET

MEXICO CITY, Aug. 13, 2020 /PRNewswire/ -- Grupo Aeroméxico, S.A.B. de C.V. ("Aeromexico" or the "Company") (BMV: AEROMEX) reports that the DIP Financing Motion was filed today before H. Judge Shelley C. Chapman of the United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court"), as a follow-up to the financial restructuring process initiated on June 30, 2020.

We previously announced that we were in the process of obtaining additional financing, known as "Debtor-In-Possession (DIP) Financing". Today we obtained, subject to court approval, commitments for a US$1,000 million senior secured superpriority multi-tranche debtor in possession term loan facility (the "DIP Facility") with funds managed by affiliates of Apollo Global Management Inc. (APO). The DIP Facility consists of (i) a senior secured Tranche 1 facility of US$200 million, and (ii) a senior secured Tranche 2 facility of US$800 million. Proceeds from the DIP Facility may only be used for certain permitted expenses, including certain working capital expenses and general corporate purposes, as well as restructuring costs.

Andrés Conesa, CEO of Grupo Aeromexico, commented: "This is a critical milestone in the ongoing process to transform our Company with the goal of driving long-term, sustainable growth for Aeromexico. Throughout this process, we will continue to provide our customers with the exceptional service and flight experience they expect from Aeromexico, and we will continue all day-to-day operations, albeit under these extraordinary COVID-19-related circumstances. This milestone is a recognition of Aeromexico's fundamentally solid operating business and proven strategy."

Subject to the fulfillment, in each case, of certain milestones, covenants and conditions precedent agreed with the DIP Lenders, (i) upon the date of entry of an order by the Court granting interim approval of the DIP Facility and fulfillment of other conditions, up to US$100 million of the Tranche 1 DIP Loans will be made available; and (ii) upon the date of entry of an order by the Bankruptcy Court granting final approval of the DIP Facility and fulfillment of other conditions, the undrawn portion of the Tranche 1 facility will be available in a single draw, and the Tranche 2 DIP Loans will be made available in an initial draw of US$175 million, and, subject to the fulfilment of certain additional conditions and milestones, subsequent draws in minimum amounts of US$100 million.

The DIP Facility, which is still subject to the Bankruptcy Court approval, the execution of definitive credit and ancillary agreements, and the fulfillment of certain conditions for funding of the separate two tranches, will provide us with liquidity to meet our future obligations in a timely and orderly fashion, and to continue with our operations during and after the voluntary restructuring process.

The Tranche 2 DIP Facility, may be converted, at the lenders' option, into shares of reorganized Aeromexico, provided that the exercise of such equity conversion option will be subject to certain conditions and, in due course, to the corporate and regulatory approvals for the issuance of the corresponding shares including by Aeromexico's general shareholders.

The terms of the DIP Facility require that Aeromexico enters into a Shareholder Support Agreement with a majority of its shareholders, representing approximately 75% of its capital stock, including Delta Airlines, under which such supporting shareholders (i) shall vote, in due course, in favor of a capital increase to effectuate, if applicable, the conversion of the Tranche 2 DIP Facility, including waiving their preemptive rights, (ii) submit themselves to the jurisdiction of the Bankruptcy Court with respect to the scope and terms of such Shareholders Support Agreement, and (iii) agree not to sell their shares during the chapter 11 process. It is anticipated that with the capital increase these shareholders will be diluted by not exercising their preemptive rights, so that their remaining equity stake could be very limited. Other shareholders within the general investor community will be allowed to exercise their preemptive rights subject to several factors that are yet to be determined.

As we have reported, certain Board members, are holders, individually, of shares representing more than 1% and less than 10% of our outstanding shares. None of our shareholders, individually, has significant influence, control or power over Aeromexico. Also, we are not controlled, directly or indirectly, by a foreign individual, entity or government. Pursuant to the Mexican Ley del Mercado de Valores (Securities Market Law) this type of shareholders agreements shall be disclosed to the public market, making it available for reference at the Company's offices.

We will continue pursuing, in an orderly manner the voluntary process of financial restructuring under the chapter 11 process, while we continue operating and offering services to our customers and contracting from our suppliers the goods and services required for operations. We will continue to use the advantages of the chapter 11 proceeding to strengthen our financial position and liquidity, protect and preserve our operations and assets, and implement the necessary adjustments to face the impact of COVID-19.

This press release contains certain forward-looking statements that reflect the current views and/or expectations of the Company and its management with respect to its performance, business and future events. We use words such as "believe," "anticipate," "plan," "expect,", "intend," "target," "estimate," "project," "predict," "forecast," "guideline," "should" and other similar expressions to identify forward-looking statements, but they are not the only way we identify such statements. Such statements are subject to a number of risks, uncertainties and assumptions. We caution you that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in this release. The Company is under no obligation and expressly disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

About Grupo Aeromexico
Grupo Aeroméxico, S.A.B. de C.V. is a holding company whose subsidiaries are engaged in commercial aviation in Mexico and the promotion of passenger loyalty programs. Aeromexico, Mexico's global airline, has its main operations center in Terminal 2 of the Mexico City International Airport. Its destination network has reach in Mexico, the United States, Canada, Central America, South America, Asia and Europe. The Group's current operating fleet includes Boeing 787 and 737 aircraft, as well as the latest generation Embraer 190. Aeromexico is a founding partner of SkyTeam, an alliance that celebrates 20 years and offers connectivity in more than 170 countries, through the 19 partner airlines. Aeromexico created and implemented a Health and Hygiene Management System (SGSH) to protect its clients and collaborators at all stages of its operation.