LATAM Airlines Group revises DIP financing proposals

LATAM Airlines Group is awaiting approval from the US Bankruptcy Court in New York of a revised draft of an amended Debtor-in-Possession (DIP) financing proposal submitted by the airline group on March 7, 2022.

The amendments were unanimously approved by the LATAM Board on March 6, according to filings to the US Securities and Exchange Commission (SEC) and Chile’s Commission for the Financial Market (Comisión para el Mercado Financierom – CMF).

The proposed changes to the DIP credit agreement – originally filed before the court on February 17 – relates to the following:

Interest:

The interest rate on Tranche A loans where interest is payable in cash at the end of each interest period is increased from LIBO plus 9.50% per annum to LIBO plus 9.75% per annum for euro/dollar loans and from the base rate plus 8.50% to the base rate plus 8.75% for borrowings made with reference to the alternate base rate;
The interest rate on Tranche A loans where interest is capitalised on a quarterly basis for payment on the maturity date is increased from LIBO plus 9.50% per annum to LIBO plus 11.00% per annum for euro/dollar loans and from the base rate plus 8.50% to the base rate plus 10.00% for borrowings made with reference to the alternate base rate;
The interest rate on Tranche C loans is increased from LIBO plus 12% per annum to LIBO plus 15% per annum.
Fees:

The debtors shall pay an additional fee equal to 1% of the drawn and undrawn financing commitments of each tranche lender.
LATAM’s restructuring plan – the Restructuring Support Agreement (RSA) of November 26, 2021 – foresees the infusion of USD8.19 billion into the group through a mix of new equity, convertible notes, and debt. This will give LATAM liquidity of USD2.67 billion and total debt of USD7.26 billion once it emerges from Chapter 11.