UTair seals debt portfolio refinancing deal

Photo by UTair

Russia’s fourth largest carrier UTair Aviation has confirmed sealing the deal to have its debt portfolio refinanced. According to the airline, the deal is structured in the form of two syndicated loans, amounting in aggregate to 42.6 billion rubles (about $605 million at the current exchange rate) plus two bonded loans with a combined value of 13.3 billion rubles, with maturity in seven and 12 years. The funds raised will enable UTair to extend its loan portfolio, thus reducing the financial load on the airline.

The loans with maturity in seven and 12 years are secured by the carrier’s sister companies UTair-Helicopter Operations and UTair-Leasing, as well as by parent UTair Group’s common collateralization pool. The seven-year syndicated loan is secured against the Russian government’s guarantee covering 50% of the loan amount. The government’s decree on providing state guarantees to the tune of 9.464 billion rubles was signed on December 12, and the guarantee agreement was signed on December 24, 2015.

The lending syndicate includes 11 banks. Raiffeisenbank is acting as the comprehensive debt restructuring adviser, while Sberbank is the lead arranger, loan agent, and collateral manager.

The closing of the refinancing deal is expected to become the final step in the UTair Airlines financial rehabilitation effort. As was reported earlier, the company will be financed though the purchase of additional shares by its major shareholder, the private pension fund of Surgutneftegas oil company, and by the administrations of two Russian regions, Khanty-Mansi Autonomous Area – Yugra and Tyumen Region, where the airline is based.

In parallel with its loan negotiations, Russia’s fourth largest airline implemented a business performance improvement plan in 2015. Having abandoned the idea of extensively increasing its market share, the carrier reconsidered its route network and optimized its fleet. In the first 11 months of 2015, the airline carried almost 5.2 million passengers, or 35.7% down year-on-year.

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