It took 18 months for LATAM to finally present its reorganization plan in order to leave “Chapter 11”, the US bankruptcy protection legislation that the airline adhered to in May 2020.
On Friday, the group based in Chile finally revealed how it intends to reorganize its debts after several postponements requested by the courts of New York, where the process was registered.
According to the announced plan, there will be an injection of $8.19 billion between new equity, convertible notes, and debt, the company said.
After leaving Chapter 11, LATAM should have a total debt of $7.26 billion and liquidity of around $2.67 billion. The amounts were considered adequate for the current period of uncertainty in world aviation.
The plan provides for the issuance of common shares in the amount of $800 million, which will be open to all LATAM shareholders. The company will also launch three distinct classes of convertible bonds that will be offered preferentially to shareholders.
In addition, the airline plans to raise $500 million in a new revolving credit facility and about $2.25 billion in debt financing.
Finally, LATAM stated that it will use the Chapter 11 process that allows the refinancing and amend of leasing contracts prior to the petition.
To make the plan viable, the Chilean company announced that it had reached a Restructuring Support Agreement (RSA) with LATAM’s largest creditor group, Ad Hoc, in addition to some unnamed shareholders.
“The last two years have been characterized by hardship across the globe – we have lost friends and family, colleagues and loved ones. And we have reeled as global aviation and travel were brought to a virtual standstill by the largest crisis to ever face our industry. While our process is not yet over, we have reached a critical milestone in the path to a stronger financial future,” said Roberto Alvo, Chief Executive Officer of LATAM Airlines
Now, LATAM will present the plan to the US court in January 2022, a process that is expected to last until March.
