LATAM Airlines Group has submitted a reorganization plan that includes a proposed capital infusion of $8.19 billion. According to the group, the capital comes through a mix of new equity, convertible notes and debt.
LATAM’s largest unsecured creditor group and “certain of LATAM’s shareholders” is backing an accompanying Restructuring Support Agreement. The reorganization would allow the airline group “to exit Chapter 11 with appropriate capitalization to effectuate its business plan.”
In May 2020, the group became one of the largest air carriers to file for Chapter 11 bankruptcy protection, due to the collapse in demand for flights brought on by the “exceptional circumstances” of COVID-19 and the global travel restrictions which followed.
Pending approval of the plan in March next year, LATAM said it expects to emerge from bankruptcy with a total debt of around $7.26 billion and liquidity of around $2.67 billion, which it said was “a conservative debt load and appropriate liquidity in a period of continued uncertainty for global aviation.”
At that point, the group says it will launch an $800 million equity rights offering to shareholders.
“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.
“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 US and Chilean law,” Alvo said. “Their infusion of significant new capital into our business is a testament to their support and belief in our long-term prospects.”
Earlier this month, LATAM and Delta Air Lines announced an expanded codeshare agreement that adds more than 20 international routes between the US and South America, plus regional and domestic destinations