Nordic Aviation files for Chapter 11

BY Fraser Tennant

One of the world's largest aircraft leasing companies Nordic Aviation Capital (NAC), together with its subsidiaries, has filed for Chapter 11 bankruptcy in order to implement a financial restructuring plan.  

Under the terms of its restructuring support agreement (RSA), NAC’s debt obligations will be comprehensively restructured, including the conversion of a substantial amount of its debt to equity, with an infusion of $537m in additional capital through a $337m new equity rights offering and a new $200m revolving credit facility.

Furthermore, NAC has obtained an additional $170m debtor in possession financing facility from its existing creditors to help fund operations during the Chapter 11 process. The additional capital will serve to support the company’s liquidity position and its plans to pursue growth in purchasing aircraft.

Following its emergence from the Chapter 11 process, the reorganised NAC will be majority-owned by its largest creditors, which are committed to the company’s long-term success and will invest substantial new equity capital in the business.

“NAC is taking this proactive step in the US because we believe it is the most efficient and effective way to implement a consensual and comprehensive financial restructuring,” said Justin Bickle, vice chairman of NAC and chairman of its restructuring committee. “With the strong support we’ve received from our lenders to date, we are pleased to be entering the Chapter 11 process with a restructuring support agreement in place.”

The industry’s leading regional aircraft lessor serving almost 70 airlines in approximately 45 countries, NAC’s fleet of 475 aircraft includes ATR 42, ATR 72, De Havilland Dash 8, Mitsubishi CRJ900/1000, Airbus A220 and Embraer E-Jet family aircraft.

“I am comforted to see the significant support demonstrated by the lenders and their confidence in NAC’s business model,” concluded Martin Moller, former chairman and founder of NAC. “I have the utmost confidence in the company’s resilience and ability to continue to serve customers in a sustainable manner throughout this process and beyond.”

News: Nordic Aviation Capital Files Bankruptcy to Overhaul Debt

Flight plan: LATAM Airlines eyes Chapter 11 exit

BY Fraser Tennant

In a bid to exit its Chapter 11 bankruptcy, airline holding company LATAM Airlines Group SA and its affiliates in Brazil, Chile, Colombia, Ecuador, Peru and the US have filed a plan of reorganisation alongside a restructuring support agreement (RSA).

The largest airline in Latin America, Chile-based LATAM sought Chapter 11 bankruptcy protection in New York in May 2020 as world travel came to a halt amid the  disruption caused by the coronavirus (COVID-19) pandemic.

The plan of reorganisation proposes the infusion of $8.19bn into the group through a mix of new equity, convertible notes and debt, which will enable the group to exit Chapter 11 with appropriate capitalisation to effectuate its business plan. Upon emergence, LATAM is expected to have total debt of approximately $7.26bn and liquidity of approximately $2.67bn.

Furthermore, LATAM will raise a $500m new revolving credit facility and approximately $2.25bn in total new money debt financing, consisting of either a new term loan or new bonds. The group also used and intends to use the Chapter 11 process to refinance or amend the group’s pre-petition leases, revolving credit facility and spare engine facility.

“The last two years have been characterised by hardship across the globe,” said Roberto Alvo, chief executive of LATAM. “We have reeled as global aviation and travel were brought to a virtual standstill by the largest crisis to ever face our industry. While our process is not yet over, we have reached a critical milestone in the path to a stronger financial future. 

“We are grateful to the parties who have come to the table through a robust mediation process to reach this outcome, which provides meaningful consideration to all stakeholders and a structure that adheres to both US and Chilean law,” he continued. “Their infusion of significant new capital into our business is a testament to their support and belief in our long-term prospects.”

Upon confirmation of the plan of reorganisation, the group intends to launch an $800m common equity rights offering, open to all shareholders of LATAM in accordance with their preemptive rights under applicable Chilean law, and fully backstopped by the parties participating in the RSA.

Mr Alvo concluded: “We are thankful for the exceptional team at LATAM that has weathered the uncertainty of the past two years and enabled our business to keep operating and serving our customers as seamlessly as possible.”

News: LATAM Airlines files restructuring plan to exit bankruptcy

Tech woes: Riverbed files for Chapter 11

BY Fraser Tennant

As a result of pandemic headwinds, closure of factories, labour shortages and continued slowdown in network optimisation sales, US information technology company Riverbed Technology has filed for Chapter 11 bankruptcy in order to implement a pre-packaged restructuring support agreement (RSA).

The RSA will allow Riverbed to reduce its debt by more than $1bn,  add a total of $100m of investment capital and significantly simplify its balance sheet – fuelling its next phase of growth, and positioning the company for long-term success.

Riverbed entered into the RSA with its equity sponsors and an ad hoc group of lenders holding a super-majority of its funded secured debt. Once the restructuring transactions, which are subject to customary closing conditions,  are complete, the ad hoc group of institutional investors – which includes Apollo Global Management – will become the majority owners of Riverbed.  

“We are continuing to move forward with our accelerated recapitalisation,” said Dan Smoot, president and chief executive of Riverbed Technology. “After thoroughly evaluating the different mechanisms through which to implement the recapitalisation, our analysis made it clear that Riverbed could achieve a cleaner, more financially beneficial outcome by utilizing the court-supervised process, setting our company up for even greater growth and innovation opportunities in the future.”

Riverbed expects to successfully complete its financial restructuring process and emerge in from Chapter 11 bankruptcy in mid-December. In the meantime, Riverbed’s operations and the acceleration of its strategy will continue as normal.

“We are pleased to continue our long-term support of Riverbed in this next chapter as they strengthen their financial position to deliver leading performance and visibility solutions to companies around the world,” said Chris Lahoud, a partner at Apollo Global Management. “Riverbed has an exceptional team and strong market opportunities, and we are confident in their strategy to deliver innovative customer solutions and long-term profitable growth.”

Founded in 2002, Riverbed solutions enable organisations to visualise, optimise, remediate and accelerate the performance of any network for any application, while supporting business objectives to mitigate cyber security risk and enhance the digital experience for all end-users.

Mr Smoot concluded: “The overwhelming support we have received from our investors is a testament to their confidence in our growth prospects and in Riverbed following the recapitalisation. Furthermore, since we announced this development, many of our customers and business partners have voiced their support and confidence in Riverbed.”

News: Riverbed Technologies files for Chapter 11 bankruptcy protection following pandemic headwinds

“Business as usual” says PAL following Chapter 11 filing

BY Fraser Tennant

A victim of prolonged travel restrictions and a decline in tourism, Philippine Airlines Inc. (PAL) has filed for Chapter 11 bankruptcy in order to restructure and reorganise its finances to navigate the COVID-19 crisis and emerge as a leaner and better-capitalised airline.

As part of the Chapter 11 process, PAL has filed a restructuring plan, which is subject to court approval, which provides over $2bn in permanent balance sheet reductions from existing creditors and allows the airline to consensually contract fleet capacity by 25 percent.

Also included in the plan is $505m in long-term equity and debt financing from PAL’s majority shareholder and $150m of additional debt financing from new investors. PAL will also complete a parallel filing for recognition in the Philippines under the Financial Insolvency and Rehabilitation (FRIA) Act of 2010.

The flag carrier of the Philippines and the country’s only full-service network airline, PAL was the first commercial airline in Asia and marked its 80th anniversary in March 2021. It was also ranked the 30th best airline in the world in 2019.

PAL has stated that business operations will continue as usual during restructuring. PAL Holdings Inc., the holding company of PAL, and Air Philippines Corporation, known as PAL Express, are not included in the Chapter 11 filing.

“We welcome this major breakthrough,” said Dr Lucio C. Tan, chairman and chief executive of PAL. “This is an overall agreement that enables PAL to remain the flag carrier of the Philippines and the premier global airline of the country, one that is better equipped to execute strategic initiatives and sustain the Philippines’ vital global air links to the world.”

The company expects to emerge from the Chapter 11 bankruptcy process before the end of 2021.

Mr Tan concluded: “We are grateful to our lenders, aviation partners and other creditors for supporting the plan, which empowers PAL to overcome the unprecedented impact of the global pandemic that has significantly disrupted businesses in all sectors, especially aviation, and emerge stronger for the long-term.”

News: Philippine Airlines files for Chapter 11 in U.S. after COVID-19 crisis

US Virgin Islands refinery Limetree Bay files for Chapter 11

BY Fraser Tennant

Following a series of operational setbacks which shuttered its St. Croix facility, US Virgins Islands refinery Limetree Bay Refining, LLC, as well as several of its affiliates, has filed for Chapter 11 bankruptcy.  

Through the Chapter 11 process, Limetree Bay intends to engage in discussions with its lenders, creditors, equity owners and others to evaluate options to maximise the value of the estate and recoveries for stakeholders, including exploring a potential sale of its assets.

Furthermore, the company has received commitments for up to $25m in new debtor-in-possession (DIP) financing that, upon court approval, is expected to provide sufficient liquidity to meet ongoing business obligations related to the maintenance of the refinery during the Chapter 11 process.

The Chapter 11 filing was necessitated in part by the temporary suspension of Limetree Bay’s petroleum refining and processing operations in May 2021 and the indefinite suspension of its plans to restart the refinery due to severe regulatory and financial constraints. The refinery had only restarted in February this year after being idle for nearly a decade.

It is expected that management will continue to be responsible for handling the care and maintenance of the refinery and all other necessary day-to-day operations throughout the Chapter 11 process. At the same time, Limetree Bay’s parent expects to continue operations at its oil storage terminal business.

“We are extremely grateful to our investors, employees and business partners for standing by us through the restart process and these uncertain times,” said Jeff Rinker, chief executive of Limetree Bay. “Severe financial and regulatory constraints have left us no choice but to pursue this path, after careful consideration of all alternatives.”

Capable of processing around 200,000 barrels per day, key restart work at Limetree Bay’s St. Croix site began in 2018, including the 62,000 barrels per day modern, delayed Coker unit, extensive desulfurisation capacity, and a reformer unit to produce clean, low-sulfur transportation fuels. The restart project provided much needed economic development in the US Virgin Islands and created more than 4000 construction jobs at its peak.

Mr Rinker concluded: “The Chapter 11 process provides Limetree Bay with the clearest path to maximise the value of our estate for our stakeholders while safely preparing the refinery for an extended shutdown.”

News: Investors balk as bankrupt St. Croix refinery needs $1 bln to be viable