The shares of the Chilean-Brazilian airline LATAM Airlines They fell 45.4% at the close of the Santiago Stock Exchange on Monday, two days after the company announced a financial reorganization plan for 8.190 million dollars to get out of the crisis caused by the pandemic.
After the opening of the stock market, the shares of LATAM -considered the largest airline in Latin America- fell more than 83%, but with the hours the collapse lessened, finally closing with a fall of 45.4% to 512 pesos per share ($ 0.6), its lowest level since April 1999.
“Although it has shown a lot of volatility at the beginning of the session, it is very likely that the LATAM share price will continue to be punished in the coming days,” Ricardo Bustamante, head of Capitaria’s Trading Studies, told La Tercera newspaper.
The fall in the airline’s shares comes after it announced on Saturday a financial reorganization plan with an injection of 8.190 million dollars, with the aim of getting out of “chapter 11” of the bankruptcy law of the United States.
LATAM availed itself of this mechanism in May of last year, due to the economic crisis that the flight restrictions imposed on the airline caused by the pandemic, which paralyzed much of the world’s air traffic.
On that occasion, LATAM shares fell 44.4% on the Chilean Stock Exchange.
The reorganization plan contains a combination of fresh capital, convertible bond issuance and debt, which would allow the airline to get out of “chapter 11”, which allows companies to reorganize without pressure from creditors.
“Conservative indebtedness”
LATAM’s plan includes the launch of an offer of 800 million dollars in preferential stock rights through the issuance of common shares and the issuance of convertible bonds offered with priority to the shareholders of the company for about 4.640 million.
It also foresees a new line of credit for 500 million and approximately 2,250 million dollars in financing through new debt, either through a new term loan or new bonds.
A US court must now approve this financial reorganization plan, in a hearing to be held next January. If approved, a “confirmation hearing” is expected two months later, the last step to conclude the judicial process in the United States.
After exiting this stage, the firm would have a total debt of approximately $ 7.26 billion and liquidity of about $ 2.67 billion.
The airline maintains that this is “a conservative level of indebtedness and adequate liquidity” in a period of continued uncertainty for global aviation, and that it will leave the group in a better position for future operations.
Reference-www.eleconomista.com.mx