A New York court allowed flag carrier Philippine Airlines (PAL) to move forward with its $505-million debtor-in-possession (DIP) financing.
In a 98-page decision issued on Thursday, September 30, US Bankruptcy Judge Shelley Chapman granted PAL’s motion to access its DIP financing, allowing it to operate business as usual.
PAL had filed for creditor protection under Chapter 11 of the US Bankruptcy Code.
Lucio Tan-led Buona Sorte Holdings, which had been pumping billions into PAL to keep it afloat, will be bankrolling the first tranche of DIP financing worth $250 million.
“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 PAL president and chief operating officer Gilbert Santa Maria.
The US Bankruptcy Court for the Southern District of New York also approved PAL’s motion for customer programs and employee compensation, among others.
“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 Rodriguez.
The restructuring plan includes $505 million in long-term debt equity and debt financing, plus $105 million in additional debt financing from new investors.
On September 10, the US court already authorized the flag carrier to access an initial $20 million from the total.
According to the budget approved by the court, $330 million can be accessed by this week, the week of September 27.
The remaining $155 million can be tapped in the week of October 25.
PAL is expecting to exit the Chapter 11 proceedings before 2021 ends, cutting its debt by $2 billion. – Rappler.com