Western Global Airlines LLC has reached a deal with its creditors that will allow the cargo carrier to continue its operations while it works on restructuring its debt. The troubled airline has secured bankruptcy financing of $77.3 million with an interest rate of 9% over the Secured Overnight Financing Rate. This financing will be used to fund the company's operations while it is under Chapter 11 bankruptcy protection.
Sources familiar with the matter have stated that Western Global Airlines is expected to file for bankruptcy in the coming days. As part of the deal, founder and CEO Jim Neff will be rolling up the debt he holds, while other creditors, including bondholders, will provide approximately half of the financing. If the restructuring is successful, Neff will likely retain control of the company after it emerges from bankruptcy.
Western Global Airlines has been exploring options to address its significant debt burden and dwindling liquidity for several months. Neff recently purchased the airline's secured debt at a discounted price in an effort to keep the company afloat while undergoing a restructuring. However, this decision has not been without controversy, as it has placed Neff ahead of unsecured bondholders in terms of repayment priority.
The cargo airline has not commented on this recent development. It remains to be seen how successful Western Global Airlines will be in its bankruptcy proceedings and subsequent restructuring efforts.