LATAM bondholders disagree with reorganization plan

The local bondholder committees of LATAM Airlines, the largest air transport group in Latin America, are not satisfied with the reorganization plan presented for their exit from bankruptcy protection.

LATAM presented at the end of November the restructuring initiative, which includes a capital injection of 8.19 billion dollars, to get out of Chapter 11 of the bankruptcy law in the United States.

“The Committees consider that the Reorganization Proposal is highly unsatisfactory and arbitrarily discriminatory for Local Bonds, since the recovery offered to these bonds is approximately 19% of their nominal value,” the bondholders said in a statement.

“Even if they participated in the class C convertible bonds of the Reorganization Proposal, which contemplates attending a capital increase of the company, the amount of the recovery would not improve significantly,” the document added.

They also indicated that the creditors that support the plan and the majority shareholders would be favored by the possibility of accessing new shares under more advantageous conditions than the others.

“The Committees expect to receive from Latam Airlines a fair and reasonable improvement of the Reorganization Proposal for the holders of the Local Bonds,” they said.

LATAM said the plan, which includes a combination of new equity, convertible bonds and debt, would lead to a 99.9 percent dilution for all current shareholders of the company.

The Bondholders’ Committees include AFP Provida, AFP Capital, AFP Cuprum, AFC Chile, MetLife Chile Seguros de Vida, Seguros de Vida Security, Banco BICE, 4Life Seguros de Vida, among others.

LATAM shares tumbled after unveiling its restructuring plan and are trading at their lows of around 30 years.