Colombia to lend up to $370m to Avianca in bankruptcy

Colombia’s disaster fund will lend as much as $370m to Avianca Holdings to help with its restructuring after a halt in travel during the Covid-19 pandemic forced the company into bankruptcy, the country’s finance ministry said. The emergency mitigation fund’s committee approved the government-backed loan, due November 2021, under the framework of debtor-in-possession financing the company is seeking in its US bankruptcy court case, the ministry said Friday. Avianca filed for Chapter 11 protection in New York in May after travel bans forced the airline to ground its fleet. It reached an agreement with lenders this month for a substantial part of the $2b it’s trying to raise as it restructures. The company is offering one of the highest premiums yet seen on a $1.3b debtor-in-possession loan. “We are pleased that the Government of the Republic of Colombia will participate in the company’s DIP financing and express our gratitude for the confidence and support this commitment demonstrates,” Avianca said Sunday. The airline’s DIP loan structure has been well-received by third-party institutional investors, it said.<br/>