News
Philippine Airlines receives U.S. court approval to access US$505 million in financing
October 4th 2021
A U.S. Bankruptcy Court has given Philippine Airlines (PAL) permission to access US$505 million of debtor-in-possession financing that provides additional liquidity to meet the company’s obligations. Read More » The financing is a key part of PAL’s restructuring plan under U.S. Chapter 11 provisions and allows the carrier to continue to operate without affecting passengers or employees. “This important step confirms our recovery process is on track as we continue to work hard on securing a fully consensual reorganization plan in an efficient manner,’’ PAL president and chief operating officer, Gilbert Santa Maria, said on Friday. The loan is available in two tranches: a first multi-draw term loan of US250 million, of which some $20 million already has been drawn, and a second tranche of US$255 million. The financing can be converted at PAL’s discretion to long-term unsecured debt and equity when it emerges from Chapter 11 rather than be repaid in cash. “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,’’ said PAL chief financial officer, Nilo Thaddeus Rodriguez. “PAL will emerge a leaner and more competitive airline thanks to our hardworking employees, the resolute commitment of our majority shareholder and strong support from our stakeholders and creditors.” PAL also revealed the U.S. Bankruptcy Court for the Southern District of New York had approved the various restructuring support agreements with stakeholders. It said this was a critical initial step towards confirmation of the consensual Chapter 11 restructuring plan, which had the support of “substantially all” of PAL’s primary aircraft lessors and lenders, original equipment manufacturers and maintenance, repair, and overhaul service providers as well as certain funded debt lenders. Philippine Airlines Inc. is the only party included in the Chapter 11 filing. PAL Holdings Inc., which is listed on the Philippine Stock Exchange, and Air Philippines Corporation, known as PAL Express, are not included in the process.
