Alliance (ASX:AQZ) share price retreats on debt facility update

New long-term fixed loans have now replaced the debt facilities.

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The Alliance Aviation Services Ltd (ASX: AQZ) share price is falling today following a reshuffle of the company’s debt facilities.

At the time of writing, the aviation services company’s shares are selling for $4.34, down 1.59%.

Alliance reorganises debt facilities

Investors are offloading Alliance shares after the company announced a change up in its existing debt facilities.

According to its release, Alliance advised it has successfully refinanced its current debt, and extended the due date. The new long-term fixed loans replace the former debt facilities that were due to expire in January 2022.

The new debt facilities, totalling $176 million, consist of the following:

  • $71 million 3-year revolving bank loan facility
  • $5 million working capital loan facility
  • $25 million 4.5-year fixed rate institutional loan
  • $25 million 7-year fixed rate institutional loan
  • $50 million 10-year fixed rate institutional loan

The loans will be used to settle the balance of the Embraer E190 acquisition as well as funding maintenance checks.

Alliance noted that the weighted average interest rate for the above loans is between 2.7% and 2.9%. In addition, if the company decided to pursue other expansionary opportunities, the debt facilities provide more leeway.

The bank facility was refinanced by its existing lending partner, Australia and New Zealand Banking Group Ltd (ASX: ANZ). The fixed rate institutional loans have been entered into with Pricoa Private Capital, whom are a subsidiary of Prudential Financial Group.

Alliance managing director, Scott McMillan commented:

We are extremely satisfied with the outcome of this financing renewal. Alliance has always taken a longer-term view of the assets it acquires, and we have now sourced funding that aligns with this view.

Pricoa has provided Alliance with debt facilities that have more flexible terms at a lower cost to the group and with a tenure that will allow Alliance to focus on the deployment of these aircraftandareturnofcapitaltoitsshareholdersinashortatimeaspossible. We welcome Pricoa to the Alliance family and are very excited to see this relationship grow in the future.

Alliance share price summary

The Alliance share price has strongly rebounded since the airline industry nosedived from March last year. Government mandated measures restricted passenger movement and effectively halted almost all airlines due to COVID-19.

However, the company’s share price has gained traction over the past 12 months, outperforming its peers who are still well below their 52-week highs. Alliance shares recently reached an all-time high of $4.92 last month.

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