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LATAM Airlines presented the reorganization plan that will strengthen the financial statements, liquidity and capital structure for future operations.
Resolving concerns and purchase rumors by Azul, which finally indicated that:
«LATAM is too expensive and beyond our budget»
These were the expressions of the CEO of Azul and they go hand in hand with what the CEO of LATAM himself revealed at a press conference with international media last Saturday:
«Azul's proposal was insufficient and incomplete».
This put an end to the dilemma that would have potentially generated one of the largest airline groups in America., but for LATAM it is time to turn the page and prepare to finally exit the embarked process of Chapter 11, for which it officially presented its reorganization plan.
LATAM and its reorganization plan
With the objective of strengthening the financial statements, liquidity and capital structure, LATAM presented its plan with the support of its creditors, which will allow you to go out during the 2022 of the process.
LATAM Airlines Group S.A. and its subsidiaries in Brazil, Chile, Colombia, Ecuador, Peru and the United States announced the presentation of a Reorganization Plan (“the Plan”), that describes the path for the group to leave the Chapter 11, in accordance with US and Chilean laws. The plan is accompanied by a Restructuring Support Agreement (“RSA” for its acronym in English) held with the Ad Hoc Group of Parent Creditors, which is the largest group of unsecured creditors in these Chapter cases 11, and some of the LATAM shareholders.
The plan proposes the injection of US$8.19 billion into the group through a combination of fresh capital, convertible bonds and debt, which will allow the group to leave the Chapter 11, with the appropriate capitalization to execute the business plan. After exiting the process, LATAM is expected to have total debt of approximately US$7.26 billion and liquidity of approximately US$2.67 billion . The group 1 has determined that this is a conservative level of debt and adequate liquidity in a period of continued uncertainty for global aviation, and that will leave the group in a better position for future operations. 1 Total debt expectation is quoted based on “converted” debt and excludes convertible debt.
LATAM will obtain US$500 million in a new committed credit line known as Revolving Credit Facility (RCF) and approximately US$2.25 billion in financing through new debt resources, either through a new term loan or new bonds.
The hearing to approve the adequacy of the Chapter's Disclosure Statement is expected 11 and the voting procedures will be held in January 2022, with a specific calendar that will depend on the Court. If the Disclosure Statement is approved (Disclosure Statement), the group will begin the petition process that will seek approval of the plan from creditors.
LATAM requests that the hearing to confirm the plan be held in March 2022.
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I really hope that Latam recovers soon., It is a historic airline and I think it is trying very hard to move forward and deserves to continue flying for many more years.
Definitely, the idea is that, come out stronger after CP11.