Swissport May Seek 90-Days Grace For Debt Restructure

Swissport International AG is considering asking lenders for a three-month forbearance on a loan that breached provisions when its owner pledged shares to back another facility, the company said on Wednesday.

HNA Group Co. pledged an undisclosed quantity of shares in the Swiss company as security on debt incurred by a subsidiary that’s a parent company of Swissport, prior to completion of its acquisition, according to a statement. This amounts to a negative pledge, which is not permitted under terms of Swissport’s credit facility, an outside spokesman for the group said.

Swissport said it has notified creditors "of certain events of default arising out of a breach of the lien covenant provisions" for a facility signed early last year.

"The company is working with independent financial and legal advisors to complete within the next 90 days, debt restructuring solutions that would benefit credit facility lenders and all bondholders," Swissport said, adding that it may also seek a forbearance period from lenders lasting 90 days.

The Swiss aviation services provider has a 660 million euro term loan maturing in 2022 and a 150 million Swiss franc revolving credit facility that were secured at the end of 2015, according to data compiled by Bloomberg.

The company has delayed publication of financial statements for 2016 "until it resolves issues related to the events of default," thereby missing a 120-day deadline. That puts it in breach of covenants on two high-yield bonds, amounting to more than 680 million euros in debt.

"The material nature of the negative pledge is the sole reason that there has been a delay in the results," the outside spokesman said. "The company is working with the auditors to remedy this."

Swissport said it has has 660 million euros in available cash balances and a further 58 million euros for working capital purposes following an equity injection by HNA, though it is not able to access its revolving credit facility until the situation is resolved. The group also said that while it has delayed releasing financial statements for 2016, trading was in line with expectations.

(Corrects to clarify forbearance in 1st paragraph.)
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