LATAM presents reorganization plan including $ 8.2 billion capital injection –


LATAM presents a reorganization plan including a capital injection of 8.2 billion dollars

The LATAM Airlines group and its subsidiaries in Brazil, Chile, Colombia, Ecuador, Peru and the United States have announced the presentation of a reorganization plan, which describes the group’s strategy to emerge from the bankruptcy of the chapter 11 in accordance with US and Chilean law.

In a press release, the Chilean carrier said the plan is complemented by a restructuring support agreement with the ad hoc group of parent creditors – which is the largest group of unsecured creditors in these Chapter 11 cases – and some of the LATAM Airlines group companies shareholders.

The RSA details the agreement between LATAM Airlines Group, the holders of more than 70% of the unsecured loans of the parent company, and the holders of approximately 48% of the US bonds dated 2024 and 2026, and certain shareholders who hold more 50% of ordinary capital.

This agreement depends on the application of the definitive documentation of the groups, and the social approvals of the shareholders.

The plan proposes to inject $ 8.2 billion into the group through a combination of new capital, convertible bonds and debt, which will allow the group to exit Chapter 11, with the appropriate capitalization. to execute the business plan.

After exiting the process, LATAM Airlines Group is expected to have total debt of about $ 7.26 billion and cash flow of about $ 2.67 billion.

After the plan has been confirmed by the American courts, the Chilean group intends to launch an offer of 800 million dollars in preferential rights by issuing ordinary shares, which will be open to all LATAM shareholders in accordance with their preferential rights, by virtue of the provisions applicable Chilean law, and which will be fully supported by the parties participating in the RSA.

Three different categories of convertible bonds will be issued by LATAM Airlines Group, which will be offered preferentially to its shareholders:

  • The A Convertible Bonds will be remitted to some of the unsecured creditors of the parent company of the LATAM Airlines Group in liquidation (dation in payment) for their credits authorized under the plan.
  • The B Convertible Bonds will be subscribed and acquired by the shareholders.
  • The C Convertible Bonds will be granted to certain unsecured creditors in exchange for a combination of new funds for LATAM Airlines Group and to manage their credits, subject to certain limitations and retained by the groups participating in the RSA.

The B and C Convertible Bonds will be delivered, totally or partially, in return for a new contribution of money for a total amount of approximately 4.64 billion dollars entirely covered by the RSA.

LATAM Airlines Group will secure $ 500 million in a new committed credit facility and approximately $ 2,250 million in financing through new borrowing resources, either through a new term loan or new bonds.

It is important to remember that, as they have done throughout the process, all the companies in the group continue to operate as far as travel conditions and demand allow.

  • The three things Juan loves most about aviation are planes, airports, and the thousands of miles flown in just a few hours. What he loves most about aviation is that it’s easier and cheaper to travel around the world and it gives you the opportunity to visit places you thought were too far away. He has traveled to various destinations in North, Central, South America and Asia. Born, raised and still living in Peru, Juan is a lawyer, football fan, foodie, avid traveler, dog lover, millennial and curious about nature.

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