Air Baltic wins court approval for initial €140m in restructuring finance
A US bankruptcy court has cleared Air Baltic to draw the first tranche of a €350 million debtor-in-possession facility while it restructures under Chapter 11. The Latvian carrier had told the court it faced a critical tipping point without the money.
Air Baltic has won court approval to draw on the first €140 million tranche of a €350 million ($404 million) debtor-in-possession financing facility. The Latvian carrier says the money is needed to keep flying through its US Chapter 11 restructuring.
In a 14 September filing with the bankruptcy court for the Southern District of New York, the airline called its position a critical tipping point. Without the facility, it told the court, it could not meet its next payroll and would likely have to shut down and begin liquidation.
Before filing for Chapter 11, Air Baltic had asked an ad hoc group of bondholders and several institutions for interim financing to give it a liquidity runway and time to put a new long-term business plan in place. Weeks of talks produced no structure with what the airline called justifiable economics that also offered enough liquidity and time. The bondholder proposal effectively began to fall apart when fuel prices rose in August amid the Iranian conflict, after which the airline turned to debtor-in-possession financing and a Chapter 11 filing.
Chapter 11 is uncommon for a European carrier, though SAS has used it before. The eligibility threshold is low: a company can file if it holds US property, a definition interpreted broadly. Air Baltic maintains a retainer with US law firm Milbank at JP Morgan Chase in New York.
The airline ran a competitive marketing process for the financing and received multiple proposals. Chief financial officer Vitolds Jakovlevs said in a separate court filing that the company engaged in two...
Sources
- flightglobal.comAir Baltic secures access to critical funding as it details brush with ‘liquidity cliff’