LATAM Airlines Group has filed its reorganisation plan, including a proposed $8.19 billion infusion of capital.
The group filed for Chapter 11 protection in May 2020, following the “exceptional circumstances” of Covid-19 which led to global travel restrictions and a collapse in demand for flights.
LATAM said that a proposed infusion of $8.19 billion into the group through a mix of new equity, convertible notes and debt, would enable it “to exit Chapter 11 with appropriate capitalization to effectuate its business plan”.
An accompanying Restructuring Support Agreement has been backed by the group’s largest unsecured creditor group and “certain of LATAM’s shareholders”.
Pending approval of the plan in March next year, the group will launch an $800 million equity rights offering to shareholders.
LATAM said that upon emergence from Chapter 11 it expects to have 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”.
Commenting on the news Roberto Alvo, Chief Executive Officer of LATAM Airlines Group S.A., said:
“The last two years have been characterised by hardship across the globe – we have lost friends and family, colleagues and loved ones. And we have reeled as global aviation and travel were brought to a virtual standstill by the largest crisis to ever face our industry.
“While our process is not yet over, we have reached a critical milestone in the path to a stronger financial future. 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.
“Their infusion of significant new capital into our business is a testament to their support and belief in our long-term prospects. We are thankful for the exceptional team at LATAM that has weathered the uncertainty of the past two years and enabled our business to keep operating and serving our customers as seamlessly as possible.”
Earlier this month LATAM announced plans to resume flights between Sao Paulo and London for the first time since January, with a four-times-weekly service launching on December 3.
