LATAM Airlines adds support to its Reorganization Plan.
LATAM Airlines Group informed this Friday that, in the context of its Chapter 11 reorganization process in the U.S. Court, on February 10, 2022, it entered into an amendment to the Restructuring Support Agreement (“RSA”), dated November 26, 2021.
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The purpose of the second amendment to the RSA is to incorporate as parties to the RSA the current members of the Ad Hoc Group of Noteholders represented by White & Case LLP (“W&C”). These include a group of the holders of the unsecured U.S. bonds issued by LATAM Finance Ltd. due April 2024, in the principal amount of US$700 million, and a group of the holders of the unsecured U.S. bonds issued by LATAM Finance Ltd. due March 2026, in the principal amount of US$800 million.
Pursuant to this second amendment to the RSA, the Ad Hoc Group of LATAM Noteholders represented by W&C has agreed, among other things: to support the Reorganization Plan submitted by LATAM, to instruct the representative of the holders of the LATAM 2024 Notes and the LATAM 2026 Notes to withdraw its objection to the Disclosure Statement and to take no further action inconsistent with the Reorganization Plan, and to instruct W&C to withdraw its motion for substantial contribution, filed with the Court. In addition, the Ad Hoc Group of Noteholders has agreed to withdraw its objections to the Plan of Reorganization filed by the airline, the Disclosure Statement and other motions pending before the Court.
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For its part, LATAM agreed to pay, among other things, on the effective date of the Plan of Reorganization, certain legal and professional fees of the Ad Hoc Group of Noteholders represented by W&C, subject to certain limits.
The Plan of Reorganization filed by LATAM late last year constitutes the path to emerge from the Chapter 11 Proceeding in compliance with U.S. and Chilean law. Prior to the signing of this second amendment, the RSA already had the support of creditors representing more than 70% of the outstanding claims, bondholders representing approximately 48% of the LATAM 2024 Bonds and LATAM 2026 Bonds, and some shareholders holding more than 50% of the airline’s capital. With the signing of this second amendment to the RSA, the Reorganization Plan submitted by LATAM now has the support of more than 67% of LATAM’s 2024 and 2026 Bonds.
Upon completion of the Chapter 11 Proceeding, LATAM will emerge stronger, with a much more robust capital structure than prior to the pandemic, allowing it to continue to drive the reactivation of operations and sustainability initiatives.
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