US court approves further €35 million for airBaltic restructuring
A US bankruptcy court in New York has approved the remaining €35 million of the first tranche of airBaltic's rescue loan, bringing it to €175 million. Bondholders have filed objections in court.
The US Bankruptcy Court for the Southern District of New York on Monday approved a further €35 million for airBaltic, Latvia's national airline. This is the remainder of the first tranche of a loan the company receives under the US "Chapter 11" procedure while it restructures its financial obligations. The news agency LETA was informed by airBaltic spokesman Augusts Zilberts. The company had already received €140 million, so the first tranche of €175 million is now fully approved.
What the DIP financing is
It is so-called "debtor-in-possession" (DIP) financing, a loan meant to cover day-to-day operations and liquidity during restructuring. The total planned amount is up to €350 million. The next tranches, of €125 million and €50 million, depend on further court decisions and on meeting conditions. The financing is backed by Barclays, Hayfin Capital Management, Morgan Stanley, Oaktree Capital Management and Strategic Value Partners. The interest rate is SOFR plus 8%, about 12% at present, and fees of up to €52.5 million will also apply.
Of the €140 million received earlier, €78.925 million was used to buy out eight aircraft and seven engines.
Conditions and deadlines
The company must keep minimum cash balances: at least €10 million after the first tranche and €20 million after the second. By early December it must sign non-disclosure agreements with at least two potential equity investors. By about 23 December it must reach agreements with aircraft lessors, Pratt & Whitney, Airbus and Lufthansa, and submit a performance improvement plan and a reorganisation plan providing for full repayment of the DIP loan.
The court also approved continued use of existing bank accounts and payment systems in Europe, and the hiring of legal and financial advisers.
Objections and passengers
The "Ad Hoc Group" of bondholders and private bondholders have filed objections to the DIP terms and their possible effect on bondholders' collateral. The source does not say how the court will rule on them. The company says flights will operate as scheduled, and existing tickets and bookings remain valid. The process could end in mid-2027.
The Latvian state owns 88.37% of airBaltic and Lufthansa 10%. Last year the group's revenue was €779.344 million and its loss €44.337 million.
