Latam share loses almost 50% of its value after reorganization plan

As expected, the Latam Airlines share crashed on the Santiago Stock Exchange. The airline’s paper sank 83.9% in the first transactions of yesterday morning, November 29, finally ending with a 45.4% drop to 512 Chilean pesos (0.60 US cents) per paper.

The origin of the collapse is in the presentation of the reorganization plan, under Chapter 11 of the Bankruptcy Law of the United States, that the company made on Friday, before the Bankruptcy Court of the Southern District of New York.

The proposal includes a combination of new equity, convertible bonds and debt, the group said in a statement, adding that it intends to launch an $ 800 million offering of rights to common securities to shareholders.

“Although our process is not yet complete, we have reached a fundamental milestone on the road to a stronger financial future,” said Roberto Alvo, CEO of the firm. Previously, LATAM said it had received several offers to finance a Chapter 11 bankruptcy exit, each for more than $ 5 billion. The group embraced protection in New York in May 2020, when world travel came to a halt amid the Covid-19 pandemic.

As indicated in the proposal, the current shareholders will be diluted 0.1% and that is why the stock loses so much value on the stock market. In any case, from the market they indicate that the current value includes the preferred option that the current shareholders have to participate in the process.