In a letter addressed to the Director of the newspaper La Segunda, the Director of Corporate Affairs for the LATAM Group Juan José Tohá categorically rejected the newspaper’s claims regarding the alleged movement of 1.3 billion dollars to LATAM Finance, a subsidiary based in the Cayman Islands.
As stated in this article, representatives of Chilean creditors of the holding company told La Segunda that the company transferred that amount from the Chilean parent to the subsidiary in question, which leaves national creditors at a disadvantage compared to international creditors.
In the letter addressed to the newspaper, Tohá states that “it is absolutely false” that LATAM has transferred funds from Chile to any of its subsidiaries established in the Cayman Islands, either LATAM Finance Ltd or Peuco Finance Ltd. Toha clarified that on the contrary, LATAM Finance issued foreign bonds for 1.5 billion dollars between 2017 and 2019, which were used “for general purposes.”
Sources close to the process consulted by Aviacionline affirm that the issuance of bonds under the jurisdiction of the Cayman Islands is a common capitalization practice in various industries and that the 1.3 billion in question were transferred in the opposite direction: from the debt issuer -and collector for the sold bonds – to the parent company, who uses the funds obtained.
The timeline for the transfer of these funds (2017 to 2019) places them outside the process of joining Chapter 11, which began in 2020.
Tohá continues to refute what was affirmed by La Segunda, which had said that the movements had not been duly reported, stating that “all transactions between group companies are duly reported to local regulators.”
The newspaper affirms that LATAM Finance is a subsidiary without operations “and that in the bond issued in 2017 for 700 million dollars, the parent company” acted as guarantor”, becoming the provider of payments for the instrument. The Director of Corporate Affairs of the holding company says in its letter that this statement is incorrect because “who must provide the funds owed to foreign bondholders is LATAM Finance.”
On the other hand, the publication of La Segunda states that the creation of the Finance and Peuco subsidiaries is related “to the decrease in tax payments.” Tohá also refutes this assertion because both subsidiaries “consolidate their tax results in Chile.”
Finally, the article states that the parent company “transferred 1.3 billion dollars to its companies during the Chapter 11 process.” Tohá clarifies that the Group is not authorized to carry out fund transfers without the approval of the Court, adding that “no movement of funds has been made between the companies mentioned after the voluntary entry into the Chapter 11 procedure.”
