Grupo Aeromexico reorganization plan nets confirmation

The bankruptcy court overseeing the Chapter 11 proceedings of Grupo Aeroméxico SAV de CV on Jan. 28 confirmed the company's proposed reorganization plan, the company announced.

The company did not provide an expected emergence date from Chapter 11 but said it would "continue working with all of its key stakeholders to swiftly emerge from Chapter 11."

Broadly, the company's reorganization plan provides for $1.5 billion in exit financing backed by the company's debtor-in-possession lender, Apollo Global Management, comprising about $720 million in new equity and $762.5 million in new senior secured first-lien notes. The plan would eliminate roughly $1.1 billion of existing debt, with a $450 million cash payment and the issuance of new equity to unsecured creditors who would recover, depending upon where in the corporate structure their claim sits, from 3% to 100%.

According to The Wall Street Journal, Apollo would end up with about 22% of the reorganized company's equity, with Delta Air Lines Inc., the company's largest pre-petition shareholder, receiving about 20% of the new equity in exchange for amending the existing partnership between the two companies, an investment of $100 million, and converting its interest in the company's debtor-in-possession facility into equity. Remaining equity would be distributed among investors.

The company estimated its reorganized enterprise value at about $5.4 billion, with a plan equity value of $2.564 billion, according to the disclosure statement.

Earlier this month, voters representing roughly 86% of the $2.68 billion of unsecured claims voted in favor of the proposed plan. Despite that show of support, several groups holding a minority of the company's unsecured claims objected to the proposed reorganization plan, including the official unsecured creditors committee, arguing the plan unfairly favored certain of the company's insiders, particularly Delta.

According to news reports, however, the company reached a last-minute settlement with the creditors' panel, announced at a court hearing Jan. 27, providing them with a $40 million note contingent on the company's performance, which left only a handful of objectors.