Aeromexico, late panic

Aeromexico registered a day of panic yesterday in the stock market, its titles lost more than 75% in the session and closed with a fall of 52 percent.

A major drop in percentage terms. What happened? It is something difficult to explain. But it could be said that it was a reaction of panic and also late.

Why? Because the information that the airline itself released yesterday – which at the beginning of operations did not cause any impact and even the share price continued to rise – suddenly shook the market, which was suddenly plunged into panic.

It turns out that Aeromexico, which is advancing in its financial restructuring process, through Chapter 11 in the United States, reported that it had received from an unrelated company, an Initial Public Offering (IPO) and that the shares subject to the offer will be paid to a price of one cent of peso per unit and contemplates the acquisition of up to 331.5 million shares, equivalent to 49% of the capital stock.

In its statement, Aeroméxico also highlighted that its partner Delta Airlines will not participate in such offer.

It was a day of panic.

And from there all kinds of speculation were generated around the restructuring process that Aeroméxico has been carrying out.

However, several points are worth clarifying. First of all, Aeromexico has nothing to worry about.

Second, the most certain thing is that the restructuring process will continue to be carried out successfully as it has been doing up to now.

Third, remember that a financial restructuring process is precisely to save profitable companies, even though creditors and shareholders could lose in the process.

It should be remembered that Aeromexico had to resort to restructuring its debt amid the confinement and economic paralysis that Covid-19 caused in the world.

It should be added that like all companies in Mexico, Aeroméxico had to “scratch itself with its own nails” because the Mexican government simply did not support them.

Aeroméxico turned to the investment fund Apollo Global Management to achieve its financial reorganization via Chapter 11 in a Court in New York.

Four months after the process started, the latter approved a financing for one billion dollars for Aeroméxico, which the Mexican airline has already received, to date.

The entire restructuring process is progressing positively and even the IPO announced yesterday by Aeroméxico was scheduled.

And fourth, yesterday’s reaction is completely late. Why? Because if Aeroméxico has done something well since it joined Chapter 11 in mid-2020, it is that it has provided extensive information on the process.

The information that yesterday caused the panic has been public for months.

Aeroméxico holds more than 80 relevant events (as it is known in the Mexican Stock Exchange to the communications that issuers disseminate among market participants, electronically) in which it communicates the entire process in detail.

The note that caused the panic yesterday, focused on one sentence: the recovery of the shareholders will be zero. Well, precisely that detail was released since February 19 of this year 2021. The paragraph is completely clear. It says: After the corresponding capital increase, the current shareholders will be almost completely diluted, so that their remaining shareholding is likely to be minimal, if any.

Even on November 29, when the Aeroméxico Restructuring Plan was updated, the company published a table in which you can see what the different creditors of the company will recover.

This table clearly indicates that the shareholders’ recovery would be nominal, if any. The Aeroméxico Restructuring Plan was presented in October, it was modified the same month and in November it was made official.

The US Court approved it the following December. The information that yesterday caused the panic and toppled Aeroméxico shares has been public for months.

So things.

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Marco A. Mares


Rich and powerful

He has worked continuously in newspapers, magazines, radio, television and the Internet, in the last 31 years he has specialized in business, finance and economics. He is one of the three hosts of the Alebrijes, Águila o Sol program, a program specializing in economic issues that is broadcast on Foro TV.

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