LT to fund PAL’s $5-M recovery plan
By Nidz Godino
LUCIO TAN
“Buona Sorte’s role in the plan cannot be overemphasized, being responsible for $505 million working capital requirement of PAI during the Chapter 11 Filing…it will provide via $255 million equity infusion in Issuer which will be downstreamed to PAI and a five-year loan to PAI of $250 million,” PAL Holdings said tycoon Lucio Tan is taking on the challenge of alleviating financial constraints of Philippine Airlines (PAL).
This, as Tan’s Buona Sorte Holdings, majority shareholder of PAL is injecting another $250 million in form of five-year term loan to PAL, the flag carrier’s parent firm PAL Holdings Inc. said in a disclosure to the Philippine Stock .
This is on top of the $225 million or P12.75 billion earlier infused by Buona Sorte to PAL Holdings by way of private placement in exchange for 10,200,000,000 new common shares of the holding firm at subscription price of P1.25 per share.
The private placement by Buona Sorte will support the increase of the holding firm’s authorized capital stock to P30 billion from P13.5 billion as part of fund-raising efforts “towards sustainable profitability.”
The $250-million term loan extended to PAL completes the $505 million working capital requirement of PAI under its proposed plan of reorganization filed with the United States bankruptcy court in New York.
Under agreements with creditors, the flag carrier will secure some $505 million for its recovery plan upon its exit from the process ,the first tranche will be $250-million facility debt to be pared down in the next five years, and the second tranche worth $255 million will be converted into equity.
Buona Sorte is privately owned company and is part of the Lucio Tan Group’s network of corporate entities for its airline business.
PAL earlier this month secured the approval of United States bankruptcy court to fully access its “debtor-in-possession” financing amounting to $505 million.
Debtor-in-possession financing is a type of financing meant for firms which filed for bankruptcy protection or Chapter 11 filing, which involves restructuring of loans while being allowed to continue operating to eventually pay off debts.
PAL is confident it will exit the Chapter 11 or corporate restructuring process by the end of the year, but revenues are unlikely to return to pre-COVID-19 levels until after 2025.
ISKUP! 