New York court approves Latam reorganization plan

The airline Latam reported this Saturday (18) that the Bankruptcy Court of the Southern District of New York in the United States has approved its reorganization plan, in another chapter for the company to be able to leave the judicial recovery process, requested in May. of 2022.

On the 11th, the company had already announced that it had obtained funding to exit the judicial reorganization – Chapter 11, or “Chapter 11”, in English, as this process is called in the United States. The deal, closed with a consortium of banks (JP Morgan, Goldman Sachs, Barclays, BNP Paribas and Natixis), involves $2.25 billion in debt issuance and $500 million in a new revolving credit facility.

But the American court still needed to approve the agreement, which happened this Saturday. With this, the company’s exit from the judicial recovery process is scheduled for the second half of this year.

“Supported by almost all of Latam’s creditors, the plan is the result of months of negotiations between key stakeholders, which included an extensive mediation period,” the company said in a statement, noting that the plan meets the legal requirements of the states. States and Chile and will ensure its long-term sustainability.

The next step is to obtain shareholder approval, at the next extraordinary meeting, of the new capital structure contemplated in the plan.

The company must also register shares and securities with the Chilean Financial Market Commission (CMF) and implement the respective preemptive right periods for the offering of shares and convertible securities to current Latam shareholders.

“Once effective, the Latam Plan will inject approximately US$8 billion through a combination of capital increase, issuance of convertible bonds and new debt. This includes funding of US$5.4 billion guaranteed by major shareholders ( Delta Air Lines, Qatar Airways and Grupo Cueto) and by Latam’s main creditors (i.e. creditors represented by the Ad Hoc group of Latam Parent Creditors and certain local bondholders),” the statement reads.

Latam’s judicial reorganization involves its affiliates in Brazil, Chile, Colombia, Ecuador, Peru and the United States.

“We are very pleased with the judge’s confirmation of our restructuring plan. This is a very important step in the Chapter 11 exit process and we will continue to work intensively to complete the remaining steps in the coming months,” said group CEO Roberto Alvo. , in note.