LATAM Airlines Group files a reorganization plan with the support of the main stakeholders

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The plan would inject up to around $ 8.19 billion in new funds into the group through a mix of stocks, convertible notes and debt, while complying with US and Chilean law.

Santiago, Chile, November 26, 2021 (GLOBE NEWSWIRE) – LATAM Airlines Group SA (“LATAM”) (SSE: LTM) and its subsidiaries in Brazil, Chile, Colombia, Ecuador, Peru and the United States have 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 global aviation and travel were brought to a virtual standstill by the biggest crisis our industry has ever faced. Although our process is not yet complete, we have reached a critical stage on the road to a stronger financial future ”, said Roberto Alvo, CEO of LATAM Airlines Group SA. a strong mediation process to achieve this result, which provides meaningful consideration to all stakeholders and a structure that adheres to both US and Chilean law. The 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 kept our business running and serving our customers as smoothly as possible.

Plan overview

The plan proposes to inject $ 8.19 billion into the group through a mix of new stocks, convertible notes and debt, which will allow the group to exit Chapter 11 with appropriate capitalization to achieve. his business plan. At its 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 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:

  • Upon confirmation of the Plan, the group intends to launch a common share rights offering of $ 800 million, open to all LATAM shareholders in accordance with their pre-emptive rights under applicable Chilean law, and fully supported by the parties participating in the RSA, subject to the completion of the final documentation and, with respect to the guarantor shareholders, obtaining the approvals of the company;

  • 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 in pago) their authorized claims under the Plan;

    • Class B Convertible Bonds will be subscribed and purchased by the shareholders mentioned above; and

    • 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 B and C convertible will therefore be provided, totally or partially, 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 backstopping shareholders of corporate approvals;

  • LATAM will raise a new $ 500 million revolving credit facility and approximately $ 2.25 billion in new money debt financing, 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 approve voting procedures is expected to take place in January 2022, with a specific timeline depending on the court’s schedule. 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 that the hearing to confirm the plan be held in March 2022.

Attachments

CONTACT: Media Contacts Ximena Ossa, Head of External Communications LATAM Airlines Group Rachel Chesley / Ana Heeren, FTI Consulting [email protected] Investor Contact Tori Creighton, Head of Investor Relations LATAM Airlines Group [email protected]
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