Colombian airline Avianca has successfully emerged from Chapter 11 bankruptcy protection proceedings in the United States, allowing a planned sale of 75 percent of the firm to Brazil's Sinergy to go ahead.

Negotiations with creditors under Chapter 11 allowed the company to get USD$94 million of debt written off and save more than USD$70 million at present value in airline leases, Avianca said in a news release.

Sinergy, which operates Brazilian regional carrier OceanAir, had offered to inject USD$63 million in cash into Avianca and assume USD$220 million in debt as part of the Chapter 11 restructuring plan approved by a New York judge.

Under its offer, Sinergy will buy Colombian conglomerate Valorem's 50 percent stake in Avianca and half of the 50 percent stake held by Colombia's National Federation of Coffee Growers. The federation will hold on to 25 percent of Avianca.

Avianca entered Chapter 11 in March last year after accumulating net losses of USD$600 million since 1998.

The existence of a US subsidiary gave Avianca access to relatively benign US bankruptcy laws that allowed it to keep operating while its owners renegotiated debts and sought a buyer.

(Reuters)