Latam pronounces exit from judicial reorganization in the USA

In the statement, the company informs that its debt is approximately US$ 3.6 billion lower on the balance sheet compared to the period prior to the lawsuit.

Latam announced this Thursday, 3rd, that it has exited judicial recovery, a situation it had been in since May 2020 when it filed the request in the United States at the beginning of the Covid-19 pandemic. The company’s operation in Brazil followed the same direction 45 days later, after financing negotiations with BNDES failed.

To leave the bankruptcy process behind, the group issued US$ 1.15 billion in bonds, part due in five years and part in seven years. It also secured $1.1 billion in financing over five years.

The amounts will be used to pay other financing that the company contracted at the beginning of the recovery process. The company also obtained a revolving line of credit of approximately US$ 500 million.

“Today is an important milestone for LATAM. We are pleased to have completed a significant transformation and come out of our reorganization process with a strengthened financial position and a renewed commitment to operational excellence”, says Roberto Alvo, CEO of LATAM Airlines Group, in a material fact.

In an interview with journalists, the executive said that the conclusion also ends the process of judicial recovery of all the subsidiaries that followed the holding company’s movement. As of now, only bureaucratic issues remain, but all points related to chapter 11 have been finalized.

The company reported that debt today is approximately $3.6 billion lower on its balance sheet compared to the period prior to the lawsuit – the reduction is equivalent to 35%.

The company predicts that it will recover more than 85% of its global operating capacity by the end of 2022 compared to 2019. And, by mid-2023, it will reach 100%.

the next steps

The company should announce in the coming weeks how the company’s strategy will be joint venture signed with Delta in 2020 and only recently approved by the US Department of Transportation (DOT). The agreement allows passengers to access more than 300 destinations between the United States and Canada and South America (Brazil, Chile, Colombia, Paraguay, Peru and Uruguay).

“There are many opportunities for growth and we are going to work on expanding the network that makes the most sense for our customers,” said Alvo.

Latam is also preparing to renew the company’s Board of Directors, with a vote scheduled for the 15th at the Extraordinary General Meeting. The board will be made up of nine members, five of whom are appointed by creditors and the rest by shareholders.

In addition, the shareholding composition can be changed if all creditors choose to convert their bonuses into shares. The so-called “strategic” shareholders (Delta, Qatar and the Cueto family) would own 27% of the company and the creditors (Sixth Street, Strategic Value Partners and Sculptor Capital Management), 67%. Minority shareholders would have 6%.

The final structure, however, should only be known in two months, when creditors have to decide what they will do with the bonds.

Source: Exam