Azul must wait: LATAM filed its reorganization plan and shields itself from hostile bids

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In the last hours of the deadline, more precisely at 22:11 on November 26, the LATAM group reported that it had filed its recovery plan with the New York Bankruptcy Court. The holding company had filed for Chapter 11 US bankruptcy in May 2020, followed in July by its Brazilian subsidiary.

The filing of the agreement within the deadline allows it to maintain exclusivity in the negotiation of its debt with creditors without having to compete against offers from other interested parties such as Azul, which some time ago began a strong move to make clear its interest in absorbing it.

LATAM - REORGANIZATION PLAN COMMUNIQUE

The negotiation deadlines indicate that the court must approve the Plan in January 2022 and the creditors must decide on it no later than March. Should their decision be to reject the agreement, the company will be exposed to external hostile bids.

The announced plan includes a Restructuring Support Agreement (RSA) with the «Home Office Ad Hoc Creditors» group, which is the largest group of unsecured creditors in these Chapter 11 cases, and some LATAM shareholders.

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«The plan proposes the injection of US$8.19 billion into the group through a combination of fresh equity, convertible bonds, and debt, which will allow the group to exit Chapter 11, with appropriate capitalization to execute the business plan. After exiting the process, LATAM is expected to have total debt of approximately US$7.26 billion and a liquidity of approximately US$2.67 billion,» the statement issued by the company said.

«The group has determined that this is a conservative level of debt and adequate liquidity in a period of continued uncertainty for global aviation, and will leave the group in a better position for future operations,» it adds.

«The last two years have been characterized by difficulties around the world: we have lost friends and family, colleagues and loved ones. We faced the biggest crisis in the aviation sector, which brought the industry to a virtual standstill. Although our process is not yet complete, we have reached a critical milestone on the road to a stronger financial future,» said Roberto Alvo, CEO of LATAM Airlines Group.

«We are grateful to those who participated in the mediation process to reach this outcome, which includes all stakeholders and provides a structure that is
U.S. and Chilean law. That they have injected significant new capital into our business is a sign of their support and their faith in our long-term prospects. We greatly appreciate the efforts of the exceptional LATAM team that has weathered the uncertainty of the past two years and allowed our business to continue to operate and for us to continue to serve our customers in the best possible way,» he concluded.

 

Pablo Díaz (diazpez)
Director Editorial de Aviacionline.com. 40 años. Argentino. Casado. Profesional de IT por elección, Aeronáutico por vocación. Casi piloto. Casi Spotter. Casi Ingeniero. Viajero ocasional, nerd frecuente.

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