LATAM Airlines announced on Saturday that it plans to emerge from Chapter 11 on November 3, thus putting an end to the restructuring process it underwent in May 2020 as a consequence of the crisis unleashed by the pandemic and the strong restrictions on the movement of people established by the governments.
The group stated that they will emerge “more agile, with a more competitive cost structure”, in addition to an “adequate liquidity to face the future of approximately USD 10.3 billion in equity” and close to USD 6.9 billion in debt.
On November 3, LATAM “will give the shares and convertible bonds to the shareholders and creditors as appropriate, and will pay certain obligations such as the Junior DIP and other fees as established in the Reorganization Plan,” the statement said.
They also point out that “after the end of its priority option right period (“POP”), the second round (“Second Round”) and the choice by the creditors of the recovery alternatives considered under the Reorganization Plan, LATAM sent the funding notices to the supporting parties to finalize the receipt of the US$5.4 billion of new funds detailed in the Reorganization Plan.”
“LATAM informs the result of the choice of the Class 5 creditors with respect to C convertible bonds that required subscription with new funds. Finally, non-supporting creditors subscribed 36,215,217 C convertible bonds,” the company’s press release continued.
“After considering the aforementioned choice by the creditors, as well as the results reported yesterday by the POP and the Second Round, the remainder of unsubscribed shares and convertible bonds that consider a contribution of new funds is 31,349,388,220 shares, 735,864,454 B convertible bonds and 6,827,128,295 C convertible bonds. Said remainder must be subscribed by the supporting parties of the Reorganization Plan subject to the applicable laws and regulations,” they added.
LATAM also indicates that all financial instruments considered in the plan and the remainder to be placed are fully backed by the supporting shareholders (Delta Air Lines, Qatar Airways, Cueto Group) and the supporting creditors (Evercore group and certain local bondholders), which guarantees that the airline will have the funds to successfully exit Chapter 11.
“Today, notices have been sent to the supporting parties requesting the supporting creditors to fund approximately $3.6 billion and the supporting shareholders approximately $736 million,” they concluded.
