Lawyer Monthly - March 2023

LATAM Airlines Leaves Chapter 11 Transaction Interview TRANSACTION INTERVIEW 85 About the Deal After more than two years of negotiation and restructuring, LATAM Airlines left Chapter 11 bankruptcy as of 3 November 2022. The airline was left with $2.2 billion of liquidity and a debt reduced by $6 billion, or 35%. The operation involved a total of $16 billion in liabilities and 38 debtors, including the airline’s passenger and cargo subsidiaries. Based out of Santiago, Chile, LATAM was created through the merger of Chilean and Brazilian airlines LAN and TAM in 2012. It filed for restructuring under Chapter 11 in May 2020 after a loss in demand created by COVID-19 pandemic restrictions and began raising funds to stay afloat. In June 2022 the airline received court approval for an $8 billion capital increase, including exit financing, which it had raised through the issuance of convertible bonds. To facilitate the completion of the Chapter 11 process, LATAM obtained an exit financing package for a total of $4.25 billion. This included a $500 million revolving credit facility and a $1.1 billion five-year term loan, in addition to a bond issue in two tranches for a total of $1.15 billion. These tranches will mature in 2027 and 2029 respectively. LATAM was also awarded two bridge loans for a total of $1.5 billion, which will mature in five and seven years from the restructuring closing date of 18 October 2022. LATAM Airlines used the funds obtained to settle its existing debtor-in-possession lines of credit, with the remainder used for general corporate purposes. Local bondholders were supported by White & Case, while the official committee of unsecured creditors was represented by Dechert. The ad hoc group of claimants (who are now LATAM’s largest shareholder, as a group) were advised by Kramer Levin Naftalis & Frankel in the US, and by the Santiago-based firm Bofill Escobar Silva Abogados. Coeymans, Edwards, Poblete & Dittborn also advised the ad hoc group. Bofill Escobar Silva Abogados advised the claimants with a team comprising partners Jorge Bofill, Ricardo Escobar, Vanessa Facuse and Sebastián Yanine, as well as associates Cristóbal Cibie, Mirenchu Muñoz, Stefan Goecke, Sebastián Contreras and Sebastián Bofill. Advisors on the transaction:

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