Latam shares collapse after presentation of restructuring plan

Santiago de Chile, Nov. 29 (EFE) .- Shares of airline Latam sank on the Santiago stock exchange on Monday, marking a 45.40% drop in value, after the company presented its plan to investment last Friday. restructuring to come out of bankruptcy.

The role of the airline, Latin America’s largest, ended the day at 512 pesos, but sank to 83.9% in the day’s first operations.

The situation arises on the first business day in the Chilean capital after the company handed a New York court a restructuring plan in which it proposes the injection of $ 8.19 billion to the group to exit Chapter 11 of the bankruptcy law of the United States. United States, which the company took advantage of last year affected by the pandemic.

The restructuring involves providing these funds through a combination of capital increase, convertible bonds and debt, and assumes that current shareholders will be diluted to 0.1%.

The plan is accompanied by a Restructuring Support Agreement (“RSA”) with the ad hoc group of parent creditors, which is the largest group of unsecured creditors in these Chapter 11 cases, and some of the shareholders of Latam.

The RSA documents the agreement between Latam, the aforementioned holders of over 70% of the parent company’s unsecured credits, and holders of around 48% of the US bonds dated 2024 and 2026, and certain shareholders who have more than 50% of the ordinary capital, subject to the application of the final group documentation, and the approval of the company by said shareholders. +

With this capital injection, Latam and its subsidiaries in Brazil, Chile, Colombia, Ecuador, Peru and the United States plan to exit the process with total debt of around $ 7,260 million and liquidity of approximately $ 7,260 million. ‘approximately $ 2,670 million.

The group has determined that this is a prudent level of leverage and adequate liquidity in a period of continuing uncertainty for global aviation, and that it will leave a better position for future operations.

After the economic blow that the pandemic struck, Latam – which is listed on the New York Stock Exchange and the Santiago Stock Exchange – voluntarily accepted U.S. bankruptcy law in May 2020, a judicial formula that allows a company that cannot pay its debts to restructure without pressure from creditors.

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