Latam’s creditors propose US$ 5 billion to finance the company’s debt – 10/13/2021 – Market

The Chilean airline group Latam received a proposal to finance its debt, as part of the judicial reorganization process in which it is inserted, informed the company on Monday night (11). The proposal is in the order of US$ 5 billion (R$ 27.7 billion), according to people interviewed by sheet, and is related to a significant reduction in the participation of current shareholders in the company’s capital.

The airline, however, remains in contact with others interested in financing its debt, which totals almost US$ 18 billion (about R$ 100 billion).

Latam adhered to the United States bankruptcy law (Chapter 11, a kind of judicial reorganization) in May 2020, followed two months later by its subsidiary, Latam Brasil.

The offer came from a group of creditors not connected to the official committee, represented by Moelis & Company and White & Case LLP. Disclosure of the proposal is mandatory after the end of the confidentiality period.

“The group has expressed certain concerns that reflect that Latam’s focus is to ensure an adequate amount of indebtedness and liquidity at the end of its reorganization process and throughout the period of its business plan, as well as compliance with all applicable laws in the implementation of the plan”, stated Latam in a statement.

The company says it has received other proposals and continues to negotiate with all interested parties to reach an agreement on the terms of a reorganization and financing plan to leave Chapter 11. Latam plans to call shareholders for an extraordinary general meeting, according to the progress of the negotiations.

The group has until this Friday (15) to expose its judicial reorganization plan with exclusivity — which means presenting a plan to shareholders and creditors without other competitors submitting acquisition proposals at the same time, for example. Within this period, the American court would have until December 15 to rule on the plan.

“If necessary, Latam will request a new extension of the aforementioned periods of exclusivity, which will be duly requested to the Court and reported to the regulatory authority and to the market”, informed the company, in a note. The deadline for the company to present an exclusive plan is November 23rd.

Azul intends to present a proposal to stay with Latam Brasil. The money, however, should not come from the company’s cash: the airline is sewing an agreement with investment funds to take the rival, according to people interviewed by sheet.

“We have received a series of very interesting proposals, most of them from the group’s shareholders and creditors, which exceed the injection of US$ 5 billion into the company, which will make it much more competitive,” stated the president of the Latam group, Roberto Alvo, in early September.

Air reaches 82% of domestic supply compared to pre-pandemic

Latam also informed that it will reach 82% of the domestic supply of seats (ASK) this month compared to October 2019, in the period prior to the pandemic. In all, there will be 478 daily national flights in Brazil.

In October, there was the addition of 42 domestic flights per week compared to September. By December, the company will open four more new destinations in the country: Juazeiro do Norte (CE), Jericoacoara (CE), Petrolina (PE) and Vitória da Conquista (BA). With this, 49 cities will be served in Brazil, five more than the company operated before the pandemic.

Regarding international flights, the company resumed 25% of its seat offer compared to October 2019.

Starting in December, the company will resume the São Paulo/Guarulhos-London route with four weekly flights, as a result of the recent opening of the United Kingdom to the entry of Brazilians. The route had ceased to be operated in January, after the restriction of flights to Brazil. Latam hopes to add two more weekly frequencies by January 2022.

According to the airline, the route to London will be the 15th international destination taken up by the company since the beginning of the pandemic, out of a total of 26 that operated in 2019. Other international destinations already reopened to Brazilians fully vaccinated against Covid-19 are Barcelona (Spain) , Paris (France), Frankfurt (Germany), Montevideo (Uruguay), Mexico City and Cancun (Mexico).

Flights to the United States should increase from next month, according to the airline, when the border will be reopened for vaccinated Brazilians. The company already operates three weekly flights on the Guarulhos-New York route and another three weekly flights on the Guarulhos-Miami route.

Adding all its branches, the group intends to take up up to 56% of its total seat offer this month, compared to two years ago.