Abra Group Finalizes $1.25 Billion Refinancing Deal
Abra Group, the parent company of Avianca Airlines, GOL Linhas Aéreas Inteligentes, and Wamos Air, has successfully completed two significant private refinancing transactions totaling USD 1.25 billion. This strategic move aims to enhance the financial stability of the group as it navigates ongoing challenges within the aviation sector.
The first transaction involves Abra Global Finance, a subsidiary of Abra Group based in the Cayman Islands. The subsidiary has successfully closed a private placement of USD 510 million in senior secured notes, which are set to mature in 2029. This placement represents a critical step in securing long-term funding for the holding company.
In addition to the private placement, Abra Group has entered into a Term Loan Credit Agreement with Castlelake, providing a five-year senior secured term loan credit facility of USD 740 million. This loan is guaranteed by the holding company and certain subsidiaries, strengthening the financial backing of the group.
The new debt carries a nominal interest rate of 14%, with interest payments made semi-annually. The structure includes 6.0% paid in cash, while the remainder will be treated as Payment-in-Kind (PIK). This innovative financing approach enables the group to maintain liquidity while managing its debt obligations effectively.
The funds from these refinancing deals will primarily be utilized to repay existing debts, specifically senior secured notes that were due in 2028. This strategic repayment aligns with Abra Group’s commitment to resolving financial challenges, particularly those arising from GOL’s Chapter 11 bankruptcy filing. Earlier in 2024, GOL entered Chapter 11 bankruptcy proceedings, prompting the need for a comprehensive restructuring plan.
As part of the refinancing process, Abra Group has reached an agreement with the holders of the secured notes to address financial defaults linked to GOL’s bankruptcy. GOL recently requested an extension from a U.S. court, seeking additional time to file its restructuring plan, with a new deadline set for May 19, 2025.
Castlelake, a key partner in this refinancing effort, has been instrumental in supporting GOL’s operations. The company leases ten aircraft to GOL, comprising four B737-8s and six B737-800s, alongside one A320-200N leased to Avianca Airlines Costa Rica and six A330-200Fs to Avianca Cargo. However, Castlelake currently has no agreements with Wamos Air, indicating a focused partnership strategy within the Abra Group’s portfolio.
This $1.25 billion refinancing is not only a testament to Abra Group’s resilience but also a proactive measure to fortify its financial foundation amid ongoing industry turbulence. As the airline sector continues to recover from the impacts of the pandemic and other economic pressures, securing such substantial financing will enable Abra Group to enhance its operational capabilities and strategic initiatives.
In summary, Abra Group’s recent refinancing moves signify a crucial turning point in its financial strategy, providing the necessary liquidity to address existing debts and support future growth. By leveraging these funds effectively, Abra Group is positioning itself for a stronger recovery and sustained competitiveness in the evolving aviation landscape.
Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com