Philippine Airlines (PAL) secured an approval from a US court to access a $505-million debtor-in-possession (DIP) financing as part of its recovery plan.
PAL received US court approval on a final basis to access a $505-million DIP financing, which the airline said is “a core feature” of its restructuring plan.
PAL president Gilbert Santa Maria said, “This important step confirms that our recovery process is on track as we continue to work hard on securing a fully consensual reorganization plan in an efficient manner. We want to thank our lenders, aviation partners and other creditors for their high level of support and confidence in the future of PAL.”
The $505-million DIP financing includes a $250-million first lien secured Tranche A multi-draw term loan, of which $20 million was drawn following approvals on the “first day” court hearing last Sept. 9.
It also includes a second lien secured Tranche B multi-draw term loan facility of $255 million.
PAL chief financial officer Nilo Thaddeus Rodriguez said, “With approval to fully access our DIP financing, PAL has the additional liquidity needed to meet our current and future obligations and to continue operating as usual.”
“We’re grateful the court saw fit to approve our motions, and we’re told it was a most efficient Chapter 11 hearing for a case of this complexity,” Rodriguez added.
The US bankruptcy court also granted PAL’s motions for customer programs, critical and foreign vendors, employee compensation and authorization to implement the airline’s restructuring support agreements with stakeholders.
Last September 3, PAL filed for a pre-arranged restructuring under the US Chapter 11 process in the Southern District of New York, hoping to emerge with fresh capital and lower debt.
PAL’s restructuring plan also includes $150 million of additional debt financing from new investors.
The airline later filed a petition before a Pasay City court for ensuring that local courts will recognize formally the Chapter 11 process and the corresponding decisions the New York court may grant.