LATAM postpones rescue plan reveal to mid-4Q21
The LATAM Airlines Group has requested an extension until November 26, 2021, to present its restructuring plan to the US Bankruptcy Court in the Southern District of New York, in an effort to advance negotiations with the various interested parties in its Chapter 11 proceedings, the airline group announced.
The Group and its affiliates in Chile, Colombia, Ecuador, the US, Peru, and Brazil have been under voluntary Chapter 11 bankruptcy protection since May 2020 following the impact of the COVID-19 pandemic.
The company filed the extension request a day before October 15, 2021, the original deadline set for the period of exclusivity to file its reorganisation plan, but pointed out that the request was a common alternative considered within the Chapter 11 process. It has asked that the deadline for its exclusive right to seek acceptance of the rescue plan also be extended from December 15, 2021, to January 26, 2022.
Financial newspaper Diaro Financiero said the postponement was expected by the market as the company so far has been unable to reach an agreement with its creditors.
Days before the deadline, the Group revealed it had received a revised non-binding financing proposal on August 31, 2021, by a so-called Ad Hoc Group of creditors that relied on a direct equity investment, a rights offering, and new debt financing. The proposal by the group of senior noteholders was presented by Moelis & Company and White & Case LLP and was made public after the expiry of a confidentiality period.
Documents released by LATAM revealed the Ad Hoc Group proposes that the LATAM Group issue USD3.4 billion worth of reorganised shares at a 5% discount to the enterprise value (USD12.5 billion). In addition, it suggests the issuance of new debt via bond issuance of USD2.2 billion, and a new revolving financing line of USD750 million.
LATAM, in a filing to the US Securities and Exchange Commission (SEC), said it intends to summon its shareholders to an extraordinary shareholders’ meeting when appropriate, subject to the progress of the ongoing negotiations with the various stakeholders that are currently pending.