Philippine Airlines, Inc. (PAL) announced on Friday that it had obtained approval from a U.S. bankruptcy judge to access the first $ 20 million of its debtor-in-owner financing totaling $ 505 million, describing the development as a “initial step” in his recovery journey.
PAL, majority owned by billionaire Lucio C. Tan, released the statement after Shelley C. Chapman, US bankruptcy judge for the Southern District of New York, approved “all” of his “First Day” motions on September 9.
“These approvals mark an important step in PAL’s turnaround plan, which will reduce the company’s debt by $ 2 billion and help [it] recover from the impact of the global pandemic, ”the airline said.
In addition to allowing PAL to withdraw $ 20 million of its $ 505 million debtor-in-operator financing, the bankruptcy judge also authorized the airline to “”[p]all suppliers and trade creditors outstanding in the ordinary course of goods and services provided throughout the Chapter 11 process, ”the company said.
He also received permission from “[c]continue to pay all salaries, compensation and employee benefits, subject to the continuation of any temporary work arrangements if necessary and maintain employee benefit programs in the ordinary course of business throughout the chapter process 11.
PAL said it plans to continue to meet all of its current financial obligations throughout the Chapter 11 process.
As part of its restructuring plan, PAL is also aiming to secure $ 150 million in debt financing from new investors.
The airline hopes to exit the Chapter 11 process before the end of the year.
PAL Holdings, Inc., the listed holding company of PAL, and Air Philippines Corp., or PAL Express, are not included in the Chapter 11 filing.
Its top five creditors with the largest “secured claims” (excluding insider claims) totaling $ 866.09 million are the Philippine National Bank ($ 156.51 million), Banco De Oro Unibank, Inc . ($ 80.42 million), China Banking Corp. ($ 54.83 million), EXIM Guaranteed Loans ($ 240.1 million) and PK Airfinance SARL ($ 334.23 million).
The company’s 40 largest creditors with “unsecured debt” (and who are not insiders) totaling more than $ 1.4 billion include the Philippine National Bank ($ 115.92 million), China Banking Corp . ($ 65.27 million) and Asia United Bank ($ 75.30 million).
PAL Holdings had suffered losses even before the pandemic crisis. Its attributable net loss widened to 71.91 billion pesos in 2020 from 10.31 billion pesos in 2019. – Arjay L. Balinbin