PAL Gets U.S. Court Approval For Financing

Philippine Airlines Inc. (PAL) has disclosed that it received U.S. court approval on a final basis to access its debtor-in-possession ("DIP") financing totaling US$505 Million, a core feature of the flag carrier’s restructuring plan.

Photo Insert: PAL President and COO Gilbert Santa Maria during the company's 80th-anniversary rites

“This important step confirms that our recovery process is on track as we continue to work hard on securing a fully consensual reorganization plan in an efficient manner. We want to thank our lenders, aviation partners, and other creditors for their high level of support and confidence in the future of PAL. We also appreciate the support of our valued customers as we continue to serve travelers and the Philippine economy,” said Gilbert F. Santa Maria, PAL President & Chief Operating Officer.

PAL’s DIP financing totals approximately US$505 Million comprising a US$250 Million first-lien secured Tranche A multi-draw term loan, of which US$20 Million was drawn following approvals on the “First Day” court hearing last September 9, and a second lien secured Tranche B multi-draw term loan facility of $255 million.

“With approval to fully access our DIP financing, PAL has the additional liquidity needed to meet our current and future obligations and to continue operating as usual. PAL will emerge a leaner and more competitive airline thanks to our hardworking employees, the resolute commitment of our majority shareholder, and the strong support from our stakeholders and creditors,” said Nilo Thaddeus P. Rodriguez, PAL Chief Financial Officer.

"We're grateful that the Court saw fit to approve our motions, and we're told it was a most efficient Chapter 11 hearing for a case of this complexity." In addition to the approval of the DIP financing, the U.S. Bankruptcy Court for the Southern District of New York granted other approvals on a final basis including PAL’s motions for customer programs, critical and foreign vendors, employee compensation, and authorization to implement the airline’s restructuring support agreements with stakeholders.

These approvals will enable PAL to emerge as a stronger and better-capitalized airline. PAL will continue to operate flights in the normal course of business in accordance with safety regulations, and the Company expects to continue to meet all its current financial obligations throughout the Chapter 11 process to employees, customers, the government, and its lessors, lenders, suppliers, and other creditors. Filing Entities Philippine Airlines Inc.

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