Aeroméxico to present restructuring plans

Aeroméxico to present restructuring plans

Bonds Debt Capital Markets Corporate & Sovereign Strategy Fixed Income Coronavirus Regulation Mexico US

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Aeroméxico has asked CIBanco to call a meeting to present its restructuring plans to bondholders after the airline missed an interest payment on two series of local notes, according to a securities filing on Thursday.

Aeroméxico filed for Chapter 11 bankruptcy protection in the United States on June 30, making it the third airline in Latin America to look for ways to restructure debt as travel restrictions during the COVID-19 pandemic have slashed earnings. The Mexico City-based carrier also said at the time that it was in talks for debtor-in-possession (DIP) financing, looking to secure sufficient liquidity to keep flying as it goes through bankruptcy proceedings in the United States.

Canada's Aimia, which owns a minority stake in the loyalty program operator PLM Premier, previously provided $100 million in financing to Aeroméxico, including a $50 million advance in late June. It also granted the airline a seven-year option to buy its 48.9% stake in PLM for $400 million or 7.5 times EBITDA, whichever is greater. Aeroméxico owns 51.1% of PLM.

Aeroméxico said on June 19 that it was considering ways to carry out an "orderly restructuring" of its short- and medium-term debt and added that it was looking for additional sources of financing. The Mexico City-based carrier joins Colombia's Avianca and Chile's LATAM Airlines in filing for bankruptcy protection in US courts.

Before the coronavirus outbreak spread to Mexico, Aeroméxico added $400 million to its debt load in February by selling new five-year notes to yield 7%.

Shares in Aeroméxico dropped 1.1% to close at MXN4.48 ($0.20) on Friday.