LATAM Airlines Group files reorganization plan, with the support of key stakeholders, paving the way for a strengthened capital structure and long-term sustainability

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Santiago, Chile, November 26, 2021 / PRNewswire / – LATAM Airlines Group SA (“LATAM”) (SSE: LTM) and its subsidiaries in Brazil, Chile, Colombia, Ecuador, Peru, and United States today announced the filing of a reorganization plan (the “Plan”), which reflects the way forward for the group to exit Chapter 11 in accordance with US and Chilean law. The plan is accompanied by a Restructuring Support Agreement (the “RSA”) with parent company Ad Hoc Group, which is the largest group of unsecured creditors in these Chapter 11 cases, and certain shareholders of LATAM . The RSA documents the agreement between LATAM, the aforementioned holders of over 70% of the parent company’s unsecured debt and holders of around 48% of the 2024 and 2026 US bonds, and certain shareholders holding over 50% of the shares. ordinary, subject to the completion of the final documentation by the parties and the obtaining of social approvals by these shareholders. As they have done throughout the process, all of the companies in the group continue to operate as travel conditions and demand permit.

“The past two years have been characterized by hardships around the world – we have lost friends and family, colleagues and loved ones. And we were shaken as aviation and global travel were virtually crippled by the biggest crisis our industry has ever faced. . While our process is not yet complete, we have reached a critical milestone on the road to a stronger financial future, ”said Roberto alvo, Chairman and CEO of LATAM Airlines Group SA “We are grateful to the parties who have come together at the table through a strong mediation process to achieve this result, which provides meaningful consideration to all stakeholders and a structure that complies with US and Chilean law. Their injection of significant new capital into our business is a testament to their support and confidence in our long-term prospects. We are grateful to the exceptional team at LATAM who overcame the uncertainty of the past two years and allowed our business to continue to operate and serve our customers as smoothly as possible. “

Plan overview

The Plan offers the infusion of $ 8.19 billion in the group through a mix of new stocks, convertible notes and debt, which will allow the group to exit Chapter 11 with an appropriate capitalization to achieve its business plan. At emergence, LATAM is expected to have a total debt of approximately $ 7.26 billion1 and liquidity of around $ 2.67 billion. The group has determined that this is prudent leverage and appropriate liquidity in a period of continuing uncertainty for global aviation and that it will position the group better in the future.

More specifically, the plan specifies that:

  • As soon as the Plan is confirmed, the group intends to launch a $ 800 million offer of ordinary subscription rights, open to all shareholders of LATAM in accordance with their pre-emptive rights under applicable Chilean law, and fully guaranteed by the parties participating in the RSA, subject to the completion of the final documentation and, with respect to guarantor shareholders, the receipt of corporate approvals;
  • Three distinct classes of convertible notes will be issued by LATAM, all of which will be offered on a preferential basis to LATAM shareholders. Insofar as LATAM shareholders have not subscribed during the respective preferential subscription right period:
    • The Class A Convertible Notes will be provided to certain general unsecured creditors of parent company LATAM in settlement (dación en pago) their authorized claims under the Plan;
    • Class B Convertible Bonds will be subscribed and purchased by the shareholders mentioned above; and
    • The Class C Convertible Notes will be provided to certain general unsecured creditors in exchange for a combination of fresh money to LATAM and the settlement of their claims, subject to certain limitations and withheld by the supporting parties.
  • The convertible bonds belonging to Classes Convertibles B and C will therefore be provided, in whole or in part, in return for a contribution of new money for a total amount of approximately $ 4.64 billion fully guaranteed by the parties to the RSA, subject to receipt by the guarantor shareholders of the approvals of the company;
  • LATAM will raise a $ 500 million new revolving credit facility and approximately $ 2.25 billion in total, debt financing in new money, consisting of either a new term loan or new bonds; and
  • The group has also used and intends to use the Chapter 11 process to refinance or modify the group’s pre-petition leases, the revolving credit facility and the back-up engine facility.

Additional information

The hearing to approve the adequacy of the Chapter 11 disclosure statement and to approve the voting procedures is expected to be held in January 2022, with a precise timetable depending on the Court’s timetable. If the disclosure statement is approved, the group will begin the solicitation during which it will seek approval of the plan from the creditors. LATAM requests the hearing to confirm that the plan will be held at March 2022.

For more information, LATAM has created a dedicated website: www.LATAMreorganizacion.com, where stakeholders can find additional key information about this announcement. The group has also set up a hotline for Chapter 11 inquiries, accessible at the following address:

  • (929) 955-3449 or (877) 606-3609 (US and Canada)
  • 800 914 246 (Chile)
  • 0800 591 1542 (Brazil)
  • 01-800-5189225 (Colombia)
  • (0800) 78528 (Peru)
  • 1800 001 130 (Ecuador)
  • 0800-345-4865 (Argentina)

It also has a dedicated email for inquiries related to the reorganization at [email protected].

LATAM is advised in this process by Cleary Gottlieb Steen & Hamilton LLP and Claro & Cia. as legal advisers, FTI Consulting as financial advisor and PJT Partners as investment banker.

The Parent Ad Hoc group, led by Sixth Street, Strategic Value Partners and Sculptor Capital, is advised by Kramer Levin Naftalis & Frankel LLP, Bofill Escobar Silva, and Coeymans, Edwards, Poblete & Dittborn as legal advisers and Evercore as investment banker.

The shareholders mentioned above are (a) Delta Air Lines, Inc., advised by Davis polk & Wardwell LLP, Barros & Errázuriz Abogados, and Perella Weinberg Partners LP as legal advisor and investment banker, (b) the Cueto group and the Eblen group,2 advised by Wachtell, Lipton, Rosen & Katz and Cuatrecasas as legal advisor, and (c) Qatar Airways Investment (UK) Ltd., advised by and Alston & Bird LLP, Carey Abrogados and HSBC as legal advisor and banker of ‘investment. Some of these shareholders are advised on an individual basis by Greenhill & Co., LLC and ASSET Chile, SA as co-financial advisers.

About the LATAM Airlines Group

LATAM is the leading airline group in Latin America with a presence in five domestic markets in the region: Brazil, Chile, Colombia, Ecuador and Peru, in addition to international operations within Latin America and between her and Europe, United States, and the Caribbean.

The group has a fleet of Boeing 767, 777, 787, Airbus A321, A320, A320neo and A319.

LATAM Cargo Chile, LATAM Cargo Colombia and LATAM Cargo Brazil are the cargo subsidiaries of LATAM Airlines. In addition to having access to the passenger compartments of the LATAM Airlines group, they have a fleet of 11 freighters, which will gradually increase to a total of 21 freighters by 2023. They operate on the LATAM group network as well as on international routes. which are only used for shipping. They offer a modern infrastructure, a wide variety of services and protection options to meet all customer needs.

Forward-looking statements

This report contains forward-looking statements. These statements may include words such as “may”, “will”, “expect”, “intend”, “anticipate”, “estimate”, “plan”, “believe” or others. similar expressions. Forward-looking statements are statements that are not historical facts, including statements about our beliefs and expectations. These statements are based on LATAM’s current plans, estimates and projections and, therefore, you should not place undue reliance on them. Forward-looking statements involve known and unknown inherent risks, uncertainties and other factors, many of which are beyond LATAM’s control and are difficult to predict. We caution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. These factors and uncertainties include, but are not limited to, those described in the documents we have filed with the United States Securities and Exchange Commission. Forward-looking statements speak only as of the date they are made, and we do not undertake to update them publicly, whether in light of new information, future events or otherwise.

Media contacts
Ximena Ossa, Head of External Communications, LATAM Airlines Group
Rachel Chesley / Ana Heeren, FTI Council
[email protected]

Investor contact
Tori Creighton, Head of Investor Relations LATAM Airlines Group
[email protected]

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1 The total debt expectation cited is on an “as converted” basis and excludes convertible debt.

2 The Cueto Group is made up of Costa Verde Aeronáutica SA and Inversiones Costa Verde Ltda y Cia. en Comandita por Acciones, and the Eblen Group is made up of Andes Aerea SpA, Inversiones Pia SpA and Comercial Las Vertientes SpA.

SOURCE LATAM Airlines Group SA


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