LATAM Airlines Group files Plan of Reorganization to exit bankruptcy

LATAM Airlines Group S.A. (LATAM) and its affiliates in Brazil, Chile, Colombia, Ecuador, Peru, and the United States announced the filing of a Plan of Reorganization, which reflects the path forward for the group to exit bankruptcy in compliance with both U.S. and Chilean law.

The Plan proposes the infusion of $8.19 billion into the group through a mix of new equity, convertible notes and debt, which will enable the group to exit bankruptcy with appropriate capitalization to effectuate its business plan.

The Plan is accompanied by a Restructuring Support Agreement (RSA) with the Parent Ad Hoc Group, which is the largest unsecured creditor group in these bankruptcy cases, and certain of LATAM’s shareholders.

Upon emergence, LATAM is expected to have total debt of approximately $7.26 billion and liquidity of approximately $2.67 billion. The group has determined that this is a conservative debt load and appropriate liquidity in a period of continued uncertainty for global aviation and will better position the group going forward.

“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 Group S.A.

“We are grateful to the parties who have come to the table through a robust mediation process to reach this outcome, which provides meaningful consideration to all stakeholders and a structure that adheres to both U.S. and Chilean law. Their infusion of significant new capital into our business is a testament to their support and belief in our long-term prospects. We are thankful for the exceptional team at LATAM that has weathered the uncertainty of the past two years and enabled our business to keep operating and serving our customers as seamlessly as possible.”

Upon confirmation of the Plan, the group intends to launch an $800 million common equity rights offering, open to all shareholders of LATAM in accordance with their preemptive rights under applicable Chilean law, and fully backstopped by the parties participating in the RSA, subject to the execution of definitive documentation and, with respect to the backstopping shareholders, receipt of corporate approvals.

LATAM will raise a $500 million new revolving credit facility and approximately $2.25 billion in total new money debt financing, consisting of either a new term loan or new bonds.