LATAM Airlines Group announced one of the non-binding financing proposals received in the framework of the negotiation of its reorganization and financing plan to successfully emerge of its reorganization proceedings under Chapter 11 of the United States Bankruptcy Code.
The proposal was presented by an ad-hoc group of creditors represented by Moelis & Company and by White & Case LLP, which was made public after the end of the confidentiality period agreed between LATAM Airlines Group and its bidders.
In the document «Preliminary List of Issues Raised by LATAM», the group expressed certain concerns that reflect that LATAM’s focus is on ensuring an adequate amount of indebtedness and liquidity at the end of its reorganization procedure and during the period of its business plan, as well as compliance with all applicable laws in the implementation of the plan.
It is contemplated to convoke its shareholders to an extraordinary shareholders’ meeting when appropriate according to the progress of the negotiations that are currently underway.
Currently, LATAM has the exclusive right to present its reorganization plan until October 15, 2021, and the exclusive right to request its acceptance until December 15, 2021.
If necessary, LATAM Airlines Group will request a new extension of said exclusivity periods, which will be duly requested from the Court and informed to the regulatory authority and the market.
The fund manager Moelis estimated LATAM Airlines Group’s enterprise value at $12.5 billion and proposed a capital increase of almost $3.5 billion. The group continues to negotiate with Sixth Street and its main shareholders.
According to latercera (Chilean Newspaper), the enterprise value allows estimating the cash flows and the debt and capital structure that the company will require upon leaving Chapter 11.
The plan presented by Moelis also implied a share reorganization that includes a capital increase of close to $3.5 billion, with a price 5% lower than the Equity Value Plan.
In addition, the plan also includes the issuance of new debt via bond issuance for $2.25 billion and a new financing line for $750 million.
And although it was not revealed what the other competing proposals were, sources linked to multiple negotiations said that there are basically two other proposals:
The first is made up of LATAM Airlines Group’s shareholders: the Cueto family, Qatar and Delta, an alliance that today has just over 50% of the shares and does not want to lose positions in the airline.
The other is Sixth Street Partners, a global firm with $50 billion in assets under management that has bought an airline debt.
