Philippine Airlines exits Chapter 11 with $ 2 billion in balance sheet reduction

Philippine Airlines exited its Chapter 11 voluntary process, completing its financial restructuring in four months.

Philippine Airlines’ reorganization plan, which was approved by a U.S. court on December 17, 2021, includes more than $ 2 billion in permanent reductions in existing creditors’ balance sheets, improvements to Philippine Airlines’ operational arrangements and additional liquidity, including $ 505 million in long-term equity investments and debt financing from the majority shareholder of Philippine Airlines.

The airline’s consensual restructuring plan was accepted by 100% of the votes cast by its main aircraft lessors and lenders; original equipment manufacturers; maintenance, repair and overhaul service providers; and some debt-financed lenders.

“Philippine Airlines is ready to contribute to the growth of the local and international air transport markets of the Philippines so as to renew the tourism industry; meet the needs of citizens of the world, including overseas Filipinos; and actively contribute to the recovery of the Philippine economy, ”said Lucio C. Tan III, director of Philippine Airlines, quoting Philippine Airlines CEO Dr. Lucio C. Tan. “Our mission as a flag bearer is more important than ever, and we are grateful for the chance to bounce back from the pandemic and continue to fulfill this mission to the best of our ability.”

“This is a time of celebration for PAL, for all of our partners and stakeholders and for our staff who have sacrificed a lot while working successfully to keep the airline flying,” said Gilbert F. Santa Maria, President and Chief Operating Officer of Philippine Airlines. “First and foremost, we thank our customers for their support and the Filipino people for remaining confident in their national carrier throughout the restructuring process. There are immense challenges ahead, but we look forward to meeting them as a rejuvenated Philippine Airlines, better positioned for strategic growth to continue to serve our customers. “

Under the new stimulus package in effect, Philippine Airlines has the opportunity to raise up to $ 150 million in additional financing from new investors.

Philippine Airlines has erased over 99% of past refunds and has now returned to normal processing times for refunds, with the exception of some 2020 cases that require validation procedures primarily involving third-party vendors.

Philippine Airlines was the only party included in the Chapter 11 file, while PAL Holdings, which is listed on the Philippine Stock Exchange, and Air Philippines Corporation, known as PAL Express, were not included in the Chapter 11 file. chapter 11.

Debevoise & Plimpton, Norton Rose Fulbright and Angara Abello Concepcion Regala & Cruz acted as legal advisers and Seabury Securities acted as financial advisor and investment banker to Philippine Airlines during the Chapter 11 process.

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