Swissport signs agreement for loan under US CARES Act
Swissport North America and the US Department of the Treasury have signed an agreement under the US Coronavirus Aid, Relief, and Economic Security (CARES) Act. The agreement provides Swissport with approximately $170 million of additional funds for payroll support during the disruption that the Covid-19 pandemic has caused in the aviation industry. Swissport also recently completed a UK Scheme of Arrangement and Consent Solicitation which creates the ability to raise significant additional liquidity.
Of the $170 million financial assistance, $111.9 million will take the form of a grant and $58.5 million will take the form of an unsecured, non-amortizing 10-year promissory note. Swissport expects that the proceeds from the PSP Agreement will be disbursed by the Treasury in three installments. The first installment of $85.2 million has been received on 10 July 2020 by Swissport. Further installments are expected to be received by Swissport by the end of July and the end of August 2020. The interest rate payable on the promissory note will be fixed at 1 percent in cash and 3 percent in PIK for the first five years with increasing rates each year thereafter. The promissory note will not have any financial covenants, and Swissport will have the right to prepay amounts outstanding under the promissory note, in whole or in part, at any time, without penalty or premium.
The PSP Agreement provides, among other things, that the PSP funds must be used exclusively for the continuation of payment of wages, salaries, and benefits to qualified employees of Swissport in the United States. The PSP Agreement between Swissport and the Treasury is consistent with the standard form of PSP agreement for air carrier contractors that has been made available to the public by the Treasury.
Swissport International AG provided lenders and investors with a trading update and the reduced anticipated funding requirements of the business to trade through the Covid-19 pandemic. Before any funds received under the US Cares Act, Swissport’s liquidity had amounted to approximately EUR 340 million at the end of June.
Swissport has been seeking significant additional financing to mitigate the economic impact of the Covid-19 pandemic and has been exploring all avenues to strengthen its liquidity. On 6 July, Swissport successfully completed a UK Scheme of Arrangement and Consent Solicitation which creates the ability to effect certain changes to the existing financing arrangements with the consent of a majority of the senior lenders, including the raising of up to EUR 380 million of super senior debt. This marks an important milestone in Swissport’s efforts to secure additional funding, which it requires to navigate the Covid-19 pandemic.