Saturday, November 27, 2021

PAL gets approval from US Court to access $505M in DIP financing

additional liquidity. Acess to its debtor-in-possession financing, Philippine Airlines Inc. has the additional liquidity needed to meet our current and future obligations and to continue operating as usual. / SunStar File

PHILIPPINE Airlines Inc. (PAL) has announced it received US court approval on a final basis to access its debtor-in-possession (DIP) financing totaling US$505 million, a core feature of the flag carrier’s restructuring plan.

“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. We also appreciate the support of our valued customers as we continue to serve travelers and the Philippine economy,” said Gilbert Santa Maria, PAL president and chief operating officer, in a statement to the local bourse Monday, Oct. 4, 2021.

PAL’s DIP financing totals approximately $505 million comprising 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 on Sept. 9, 2021, and a second lien secured Tranche B multi-draw term loan facility of $255 million.

“With approval to fully access our DIP financing, PAL has the additional liquidity needed to meet our current and future obligations and to continue ope

rating as usual. PAL will emerge a leaner and more competitive airline thanks to our hardworking employees, the resolute commitment of our majority shareholder and the strong support from our stakeholders and creditors,” said Nilo Thaddeus Rodriguez, PAL chief financial officer.

“We’re grateful that 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.”

Other approvals

In addition to the approval of the DIP financing, the US Bankruptcy Court for the Southern District of New York granted other approvals on a final basis including PAL’s motions for customer programs, critical and foreign vendors, employee compensation and authorization to implement the airline’s restructuring support agreements with stakeholders.

These approvals will enable PAL to emerge as a stronger and better-capitalized airline. PAL will continue to operate flights in the normal course of business in accordance with safety regulations, and the company expects to continue to meet all its current financial obligations throughout the Chapter 11 process to employees, customers, the government, and its lessors, lenders, suppliers and other creditors.

PAL is the only party included in the Chapter 11 filing; while PAL Holdings Inc., which is listed on the Philippine Stock Exchange and Air Philippines Corp. known as PAL Express, are not included in the Chapter 11 filing. (PR)


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