The US court has approved Philippine Airlines Inc. (PAL) access to its $505 million debtor-in-possession (DIP) financing, a core feature of the flag carrier’s restructuring plan.
“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,” Gilbert F. Santa Maria, PAL President & Chief Operating Officer, announced Oct. 1, 2021.
PAL’s $505 million DIP financing is composed of 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 last September 9, 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 operating as usual,” explained Nilo Thaddeus P. 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,” he added.
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. The Tan-owned airline expects to continue to meet all its current financial obligations throughout the Chapter 11 process.