LATAM Secures Chapter 11 Exit Funding

LATAM Airlines announced last Saturday that “after an exhaustive process of seeking the best terms available” for financing its Chapter 11 exit process, it has signed letters of commitment with various financial institutions.

According to the company, this represents a “sign of market confidence” in it. On the other hand, they said the commitments are “one more step” to complete the process during the second half of 2022, “with a more solid financial structure”.

The financing is part of the restructuring envisaged in the company’s reorganization plan. The Commitment Letters provide for new debt in the amount of $2.25 billion. They are also considering a committed line of credit totaling $500 million. The process is subject to approval by the US court handling the case.

Additionally, they represent a $1.172 billion funding facility to be provided while the Chapter 11 process remains in effect. The amount will be available as DIP (debtor-in-possession) financing. However, exit funding has been structured to remain available after the company has fully completed the process.

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“This commitment assures us of all the financing necessary to carry out our restructuring plan and, above all, with a degree of flexibility that allows us to optimize existing market conditions,” said Roberto Alvo, CEO of LATAM Airlines.

The company had voluntarily committed to the process in 2020 in order to overcome the crisis caused by the restrictions on air travel.

However, it is still awaiting the court’s decision on its reorganization plan. The company has good expectations in this regard. In the same vein, they put forward the agreements and the support of practically all the creditors.

See also: Another bites the dust: Thai AirAsia X officially launches bankruptcy proceedings

Michael J. Birnbaum