LATAM Airlines Files Restructuring Plan For Chapter 11 Bankruptcy Protection

LATAM Airlines Group S.A. announced that it has filed plan of reorganization to support the company's exit from Chapter 11 bankruptcy protection in compliance with both U.S. and Chilean law. LATAM specified that the plan will strengthen its balance sheet and liquidity, and provide the capital structure necessary for its operations.

LATAM said the plan follows a restructuring support agreement, backed by its largest unsecured creditor group, and certain shareholders holding more than 50% of common equity.

The Plan proposes the infusion of $8.19 billion into the group through a mix of new equity, convertible notes, and debt, which will enable the group to exit Chapter 11 with appropriate capitalization. Upon emergence, LATAM is expected to have total debt of about $7.26 billion and liquidity of about $2.67 billion.

Upon confirmation of plan, the group intends to launch an $800 million common equity rights offering, open to all shareholders of LATAM, which will be fully backstopped by those participating in the restructuring support agreement.

The company said it will also issue three classes of convertible notes which will be pre-emptively offered to its shareholders. The convertible notes belonging to the Convertible Classes B and C will therefore be provided in consideration of a new money contribution for $4.64 billion.

LATAM said it will raise a $500 million new revolving credit facility and about $2.25 billion in new money debt financing, consisting of either a new term loan or new bonds.The company intends to use the Chapter 11 process to refinance or amend the group's pre-petition leases, revolving credit facility, and spare engine facility.

The company specified that the hearing to approve the adequacy of the Chapter 11 Disclosure Statement and approve voting procedures is expected to be held in January 2022. If the Disclosure Statement is approved, the company will seek approval of the Plan from creditors. LATAM said it is requesting the hearing to confirm the Plan be held in March 2022.

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