Swissport breaches covenants, looks to restructure debt but says liquidity strong

New York, May 3 – Swissport Group said that it has breached covenants in its senior secured credit facility and high-yield bonds.

The company is working on a debt restructuring but added that its financial position “remains strong” and that it will meet all its obligations.

Credit facility lenders were notified on Wednesday of events of default under the loan because Swissport has breached the lien covenant provisions, according to an announcement.

The company said that the notification follows discussions between Swissport and HNA Group regarding an equity injection that is intended to improve its capital structure.

As part of that process, Swissport said it became aware of pledges granted over the shares of Swissport Group Sarl, Swissport Investments SA and Aguila 2 SA as security for a sponsor debt facility incurred by a subsidiary of HNA Group Co. Ltd. that is a parent company of Swissport prior to the completion of the acquisition of Swissport by HNA Group.

The shares subject to these pledges do not include any shares that are included in the collateral intended to secure the credit facility or Swissport’s senior secured high-yield bonds.

Swissport also informed holders of its €400 million senior secured high-yield bonds and €280.5 million senior unsecured high-yield bonds of the defaults under the credit facility.

In addition, Swissport has defaulted on the financial reporting covenants in the bond indentures because it is delaying publication of its full-year 2016 consolidated audited financial statements until it resolves the issues related to the events of default.

However the company did say on Wednesday that its trading performance in 2016 was in line with expectations.

Because of the events of default, Swissport will not be able to draw on its revolving credit facility.

But it said that following the equity injection by HNA Group it has €660 million in available cash balances and €58 million of cash for working capital purposes, in addition to cashflow from operations.

Consequently Swissport expects no impact from the defaults on its day-to-day operations or its ability to meet its financial obligations.

Swissport said it is working with independent financial and legal advisers on a debt restructuring which it intends to complete with 90 days.

The restructuring is intended to improve its capital structure while preserving the integrity of the collateral package in a manner that ensures the continuing structural subordination of the sponsor facility to obligations under the company’s own credit facility and its bonds.

Credit facility lenders may be asked for a 90-day forbearance period.

Swissport is a Zurich-based provider of aviation ground and cargo handling services.

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