Swissport Announces Technical Breach of Certain Covenants in Credit Agreement
Financial Position Remains Strong; Has Sufficient Liquidity to Meet All Obligations
Taking Action to Improve Group Capital Structure, Restructure Holding Companies
Delays Publication of Full Year 2016 Audited Financial Statements; 2016 Trading Performance in Line with Expectations
Zurich, Switzerland – 3 May 2017: Swissport Group (“Swissport” or “the Group”) today notified its lender group under the senior secured credit agreement dated 20 January 2016 (the “Credit Facility”) of the existence of certain events of default arising out of a breach of the lien covenant provisions contained in the Credit Facility documents.
The notification follows recent discussions between Swissport and HNA Group regarding an equity injection from HNA Group intended to enable certain improvements to Swissport’s capital structure. As part of that process, Swissport became aware of pledges granted over the shares of Swissport Group S.à r.l, Swissport Investments S.A. and Aguila 2 S.A. as security for a debt facility incurred by a subsidiary of HNA Group Co. Ltd that is a parent company of Swissport (the “Sponsor Facility”) prior to the completion of the acquisition of Swissport by HNA Group. The shares subject to such pledges do not include any shares that are included in the collateral intended to secure the Credit Facility or its senior secured high yield bonds.
Swissport’s financial position remains strong. The Group has sufficient liquidity to meet all of its obligations and otherwise pursue its business while it works with its creditors to resolve issues related to the events of default under the Credit Facility.
The Group will delay publication of its full-year 2016 consolidated audited financial statements until it resolves issues related to the events of default, but can confirm that 2016 trading performance is in line with expectations.
Senior Secured and Senior Unsecured Bonds
The Group also today informed holders of its Luxembourg-listed €400 million senior secured high yield bonds and €280.5 million senior unsecured high yield bonds of the events of default under the Credit Facility. As a consequence of Swissport’s inability to publish full year 2016 consolidated audited financial statements no later than 120 days after the close of the prior fiscal year, the Group has also incurred a default of the financial reporting covenants included in its bond indentures and has notified the bond trustee accordingly.
Financial Position and Liquidity:
Pending resolution of the events of default, the Group will not be able to access borrowings under the revolving credit facility under the Credit Facility documents. However, following the equity injection by HNA Group, Swissport currently has €660 million in available cash balances and €58 million of cash for working capital purposes, in addition to cashflow from operations. As a result of this strong liquidity position, the events of default are not expected to impact on Swissport’s day-to-day operations or on its ability to meet its ongoing financial obligations.
Swissport 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, while improving the Group’s capital structure and preserving the integrity of the collateral package in a manner that ensures the continuing structural subordination of the Sponsor Facility to obligations under the Credit Facility and the Bonds. The Group may seek a 90-day forbearance period from its Credit Facility lenders while it implements this solution and will update the market in due course.
Christian Goeseke, Chief Financial Officer
T: + 41 43 815 01 30
Richard Oldworth / Chris Judd
T: +44 (0)20 7466 5000
Notes to editors
Swissport International Ltd. provides ground services for more than 230 million passengers and handles 4.3 million tonnes of cargo a year on behalf of some 835 client-companies in the aviation sector. With a workforce of more than 62,000 personnel, Swissport is active at more than 280 stations in 48 countries across five continents, and generates consolidated operating revenue of EUR 2.7 billion. www.swissport.com.