Aeromexico’s new plan includes Apollo debt-to-equity option

In what is described as a key milestone in its restructuring process, Grupo Aeroméxico has received a new proposal to emerge from bankruptcy by having lead lender Apollo Global Management Inc. convert some debt into equity, reports Bloomberg. A previous exit package didn’t include the US firm getting a stake.

The Mexican flag carrier, which filed for Chapter 11 bankruptcy in 2020, said that a group of new and existing creditors and investors would repay the rest of the loan held by Apollo, which led the carrier’s debtor-in-possession financing. Amounts were not disclosed.

Apollo mounted a USD1 billion rescue plan of the airline last year. The second tranche of the loan, worth USD800 million, gave the creditors the option to receive shares in the restructured company.

Dubbed the “Alliance Proposal”, Aeromexico in a statement to investors, said the plan had the support of its largest strategic partner Delta Air Lines, which already said it would acquire USD185 million of that tranche.

Foreign ownership requirements will be complied with through a group of long-term Mexican investors, Aeromexico said.

The company’s board had approved the plan, and a revised version would be filed before the US Bankruptcy Court in the Southern District of New York. A hearing to confirm the plan would be set by the court at a later date.

The new plan would replace one filed on October 1 that included USD1.2 billion in equity and as much as USD537.5 million in new debt. However, that deal didn’t include Apollo converting any debt into equity. That plan estimated Aeromexico to be worth USD5.4 billion.

Aeroméxico said it would continue to work with all of its key stakeholders to finalise and file the plan documents, obtain court approval of the plan, solicit votes in favour of it once the disclosure statement was approved, and emerge from Chapter 11 as expeditiously as possible.