MIAMI – The LATAM Airlines Group has presented the second tranche (Tranche A) of its DIP (debtor-in-possession) financing proposal to the Court of the Southern District of New York, as part of its Chapter 11 process.
Tranche A amounts to US$1.3bn, committed by Oaktree Capital Management L.P. and its affiliates. This proposal must be reviewed and approved by the court in the coming days.
Details of Tranche A
Tranche A complements Tranche C, which comprises US$900m that was committed by shareholders Qatar Airways (QR) and the Cueto and Amaro families when LATAM and its affiliates in Chile, Colombia, Peru, Ecuador and the United States filed for Chapter 11 in May 2020.
Tranche C includes an upsize of US$250m that will enable other shareholders in Chile to participate once approved by the court.
Combined, Tranches A and C meet LATAM’s financing requirements in the context of the COVID-19 crisis in the hopes that financial support will not be required from governments.
Nonetheless, LATAM Airlines Brazil (JJ) will continue advancing negotiations with Brazil’s National Bank for Economic and Social Development (BNDES).
Statement from LATAM Airlines Group
Roberto Alvo(51), CEO of LATAM Airlines Group, said, “LATAM has taken a significant step in ensuring its operational continuity by securing the commitment of Oaktree Capital Management and its affiliates for the total financing of Tranche A. We hope that, together with Tranche C, it will be approved by the court in the coming weeks.”
Alvo also added, “The support of two of our principal shareholders has been essential, sparking interest and commitment from investors that we did not have a month ago.”
“This show of confidence in the group’s future has enabled us to secure all the resources that are required to continue operating during the crisis and as demand recovers, to successfully complete the Chapter 11 process.”
LATAM Airlines Brazil files for Chapter 11
The Brazilian branch of the company recently began a voluntary reorganization process as part of its Chapter 11 protection in the United States to restructure its debt and effectively manage its aircraft fleet, while enabling operational continuity.
LATAM Airlines Group and its affiliates in Chile, Peru, Colombia, Ecuador and the United States are already part of this process, which began on May 26, 2020.
The Brazilian branch of the company decision is a natural step in light of the continuing COVID-19 pandemic and offers the best option to access to the proposed DIP financing that will provide the tools to adapt to this new reality.
LATAM Brazil will continue to operate passenger and cargo flights, just as the Group and its affiliates have done since they entering Chapter 11.
Likewise, when authorized by the court, JJ will continue to fulfill its commitments to customers, with tickets, its frequent flyer program and flexibility policies all being honored.
All obligations to employees, including pay and benefits, will be respected by the company.
Source: LATAM Press Releases