Both companies are controlled by bilyonaryo Lucio Tan.
PAL revealed that it tapped its $36.8 million worth of standby letters of credit with PNB to pay off its lessors in the few months before the flag carrier filed its Chapter 11 bankruptcy protection on September 3.
PAL is paying roughly $48 million in monthly lease payments on 85 aircraft in its fleet.
PAL’s cash has dropped to $21.8 million at the end of August from $43.069 million at the end of 2020.
PAL said the new loan was converted into promissory notes and have been classified as part of its bank loans in the Chapter 11 filing.
The new loan is partially secured by a real property with an agreed value of P1.36 billion.
Based on its filing with the United States Bankruptcy Court for the Southern District of New York, PNB is the third largest secured lender with $156.51 million (aircraft and spare engine used as collateral) and the ninth largest unsecured creditor with $88.842 million.
PNB booked P19 billion in bad loan provisions in the first half of 2021, of which P16.9 billion was made in the second quarter.
This is nearly four times its impairment provisions of P5.08 in the same period in 2020.