Colombia’s Avianca Holdings has reached an agreement with United Airlines Holdings and Kingsland Holdings S.A. that would see the Latin American carrier receive financing of up to $250 million while it executes a debt re-profiling plan. 

As part of the deal, United and Kingsland—a major Avianca shareholder—will provide the carrier a four-year loan at an interest rate of 3%, to be paid-in-kind until maturity. All parties reserve the right to convert the loan into shares at a price-per-share of $ 4.6217, representing a 35% premium to the company’s 90-day weighted price through Oct. 3. The deal will be secured by a pledge of stock in Avianca’s subsidiaries. 

“United congratulates Avianca Holdings on this important step in its Avianca 2021 plan. We look forward to Avianca’s successful achievement of agreements with its other stakeholders, and to working together with Avianca to complete final documentation for our loan,” United SVP-alliances John Gebo said.

The final documentation is still being drafted, and should be executed by mid-October, the companies said. Funding remains subject to certain conditions, such as the successful conclusion of Avianca’s debt reprofiling plan—as called for by its Avianca 2021 strategic plan—as well as the closing of the carrier’s exchange offer for its $500 million 2020 bond.

“This agreement represents another crucial step in the financial execution of our Avianca 2021 plan, building on the success we have achieved to date in the bond exchange offer,” Avianca CFO Adrian Neuhauser said. “We believe the terms we have agreed to are very attractive, and we are grateful for the confidence United and Kingsland continue to place in the company and its management.”

Avianca said in a statement that it continues to work on “quickly finalizing negotiations with its creditors and fulfilling the conditions necessary to conclude the bond exchange offer,” adding that it expects to allow its preferred shareholders to participate in $125 million financing “under similar conditions.”

The Colombian carrier last received a $50 million loan in September from Kingsland. In May, Avianca underwent a management overhaul that saw Anko van der Werff and Neuhauser step in to fill the CEO and CFO roles, respectively. 

The leadership reshuffle—which also included appointing a new board—came as part of a deal that saw United extend further financing to the carrier after its largest shareholder—German Efromovich’s holding company BRW Aviation—defaulted on a $456 million loan from United earlier this year.

Ben Goldstein,