ZURICH/LONDON (Reuters) - Swissport has secured hundreds of millions of euros of financial backing from creditors, gaining a vote of confidence in its future as the travel sector is hard hit by the COVID-19 crisis.
The Swiss-based airport ground services firm said a comprehensive restructuring with lenders included 300 million euros ($353 million) in interim support and a 500 million euro long-term debt facility that will replace that initial backing.
The deal could safeguard thousands of jobs among Swissport staff who provide passenger services as well as cargo and ramp handling in 300 airports around the world.
It is also significant for financial players because it is one of the first high-profile distressed investment cases in Europe since the start of the COVID-19 crisis, initially viewed as an opportunity for many of these funds, though few deals have happened in Europe so far.
Under the Swissport deal, distressed funds led by Apollo Global Management APO.N could squeeze out Chinese owner HNA Group.
Reuters reported in May that a trio of distressed investors led by Apollo had bought debt of Swissport and were holding talks with the company.
The latest cash injection will add to the more than 200 million euros of liquidity Swissport had on Aug. 18, it said. The restructuring is expected to be completed in late 2020.
“The 300 million clearly is very important to give us the liquidity to confidently trade through the COVID pandemic for the next months or year to come,” Chief Financial Officer Peter Waller told journalists on a call.
Executives declined comment on whether HNA would remain owner, saying detailed terms of the restructuring were expected to be released within days. “I think you’re familiar with how restructurings typically turn out,” Waller said.
Distressed funds often lend to companies going through restructuring processes with a view to taking over, in what is referred to as a “loan-to-own” trade.
With government support likely to wind down in coming months, more distressed opportunities will arise, said Matthew Czyzyk, a partner in law firm Ropes & Gray’s restructuring team.
“This will provide opportunities, both in the U.S. and Europe, for credit funds looking to deploy capital in loan-to-own strategies or through new money financing for distressed companies,” Czyzyk said.
Swissport said it had seen stronger trading than originally anticipated. Revenue for the three months to June 30 fell 70% to 235.5 million euros, but there had been an uptick since then.
It fell to an operating EBITDA loss of 67 million euros for the second quarter but in July achieved positive EBITDA from better revenue, cost cuts and state assistance.
($1 = 0.8493 euros)
(This story corrects name of Ropes & Gray’s partner to Matthew Czyzyk in 11th paragraph.)
Reporting by Oliver Hirt and Brenna Hughes Neghaiwi Editing by Michael Shields and David Holmes
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