Latam Airlines Group SA presented a reorganization plan to achieve Get out of Chapter 11 of the US Bankruptcy Law. In addition, it has reached an agreement with interested parties so that it can reduce its debt and get out of bankruptcy under new owners. The injection of US $ 8,190 million to the group, which will allow Latam to continue with its services in its subsidiaries.
After exiting the process, Latam is expected to have total debt of approximately US $ 7.26 billion and liquidity of US $ 2.67 billion. The company expects the hearing to confirm the reorganization plan to take place next March 2022.
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“The last two years have been characterized by difficulties around the world: we have lost friends and family, colleagues and loved ones. This is how we face the biggest crisis in the aviation sector, in which the industry practically came to a standstill. Although our process is not yet complete, we have reached a fundamental milestone on the path to a stronger financial future, “he said. Roberto Alvo, CEO of LATAM Airlines Group SA
In this way the debt would be amortized and they would have adequate liquidity in a period of uncertainty continues for global aviation, and that will leave the group in a better position for future operations, which would be an advantage for Latam and its subsidiaries in Brazil, Chile, Colombia, Ecuador, Peru and the United States.
Plan details
The group intends to launch an offer of US $ 800 million in ordinary shares through the issuance of ordinary shares that will be opened to the current shareholders of Latam in accordance with their preferential rights and that will be backed by the interested parties of the restructuring.
In addition, the plan provides for the issuance of three kinds of bonds that can be converted into shares. Under Chilean law, current shareholders will also have the right to buy them, but their structure makes them more attractive to creditors and shareholders who support the plan, Alvo said.
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Convertible A bonds that will be delivered to some of the unsecured creditors of LATAM’s parent company in liquidation for their credits allowed under the plan. B convertible bonds that will be subscribed and acquired by the aforementioned shareholders and the C convertible bonds that will be awarded to certain unsecured creditors in exchange for a combination of new funds to Latam and to service their loans subject to certain limitations and withholdings from the groups interested in restructuring.
In addition, the convertible bonds belonging to classes B and C will be delivered, totally or partially, in consideration of a new money contribution for a total amount of US $ 4.64 billion fully supported by the groups interested in the restructuring of Latam.
On the other hand, Latam will get US $ 500 million in a new line of credit known as the Revolving Credit Facility (RCF) and approximately US $ 2.25 billion in financing through new debt resources, either through a new term loan or new bonds.
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