SANTIAGO, Chile, May 26, 2020 /PRNewswire/ -- LATAM Airlines
Group S.A. ("LATAM") (NYSE: LTM; SP IPSA: LTM) and its affiliates
in Chile, Peru, Colombia, Ecuador and the
United States today initiated a voluntary reorganization and
restructuring of their debt under Chapter 11 protection in
the United States with the support
of the Cueto and Amaro families and Qatar Airways, two of the
largest shareholders of LATAM. In light of the effects of
COVID-19 on the worldwide aviation industry, this reorganization
process provides LATAM with an opportunity to work with the group's
creditors and other stakeholders to reduce its debt, access new
sources of financing and continue operating, while enabling the
group to transform its business to this new reality.
The Chapter 11 financial reorganization process is a proven
legal framework under which LATAM and said affiliates will have the
opportunity to resize their operations to the new demand
environment and reorganize their balance sheets, enabling them to
emerge more agile, resilient and sustainable. LATAM and its
affiliates will continue flying as conditions permit throughout the
process.
"LATAM entered the COVID-19 pandemic as a healthy and
profitable airline group, yet exceptional circumstances have
led to a collapse in global demand and has not only brought
aviation to a virtual standstill, but it has also changed the
industry for the foreseeable future," said Roberto Alvo, Chief Executive Officer of
LATAM. "We have implemented a series of difficult measures
to mitigate the impact of this unprecedented industry disruption,
but ultimately this path represents the best option to lay the
right foundation for the future of our airline group. We are
looking ahead to a post-COVID-19 future and are focused on
transforming our group to adapt to a new and evolving way of
flying, with the health and safety of our passengers and employees being
paramount."
The group has secured the financial support of shareholders,
including the Cueto and Amaro families, which have lasting ties to LATAM, and Qatar
Airways, to provide up to $900
million in debtor-in-possession (DIP) financing. These
partners have a profound understanding of the industry, the group
and its operational challenges. Their support demonstrates a belief
in LATAM and its affiliates and their long-term sustainability. To
the extent permitted by law, the group would welcome other
shareholders interested in participating in this process to provide
additional financing. In addition, as of the filing, the group had
approximately USD$1.3 billion in
cash on hand.
LATAM and its affiliates are also in discussions with their
respective governments of Chile,
Brazil, Colombia and Peru to assist in sourcing additional
financing, protect jobs where possible and minimize disruption to
its operations. LATAM and its affiliates would like to thank its
shareholders, employees, creditors and the communities it serves
for their support to help secure the group's long-term future. The
group is confident that this process will bring together these
diverse stakeholders to build a new LATAM that is better placed to
succeed for years to come.
"Faced with the biggest crisis in the history of aviation,
the Board has approved this path
forward having analyzed all the available alternatives to ensure
the sustainability of the group. As we have adapted to new
realities in the past, we are confident that LATAM will be able to
succeed in the post-COVID-19 context and continue to serve
Latin America, connecting the
region with the world," said Ignacio Cueto, Chairman of LATAM's Board of
Directors.
The group is continuing to adapt and respond to the COVID-19
pandemic and is actively preparing to welcome customers back once
travel prohibitions are lifted and demand increases, guaranteeing
the highest safety standards for passengers and crew for which
LATAM is highly recognized.
Continuing to serve Latin
America
LATAM group is committed to preserving business continuity as it
reorganizes – especially with respect to employees, customers,
suppliers, commercial partners and local communities.
- LATAM Airlines Group S.A. and its affiliates will continue to
operate passenger and cargo flights, subject to demand and travel
restrictions.
- All current and future tickets, travel vouchers and frequent
flyer miles and benefits, as well as flexibility policies, will be
honored.
- The group's employees will continue to be paid and receive
benefits as provided in their employment agreements.
- Suppliers will be paid in a timely fashion for goods and
services delivered from May 26, 2020
forward and throughout this process.
- Travel agencies and other commercial partners will experience
no disruption in their interactions with the LATAM group.
The right option to strengthen the group
The LATAM group has shared its journey with the people of
Latin America, thriving in times
of growth and pulling together to overcome times of adversity, and
like many, LATAM and its affiliates began 2020 with hopes of
progress that COVID-19 has brought to a virtual standstill. In
2019, the group launched 26 new routes and transported a record 74
million passengers, 5.4 million more than in 2018. The group's
plans for 2020 included further enhancing its passenger experience
through cabin transformations and strengthening its strategic
partnerships to further connect Latin
America with the world. While the group will change through
the Chapter 11 process, its culture, commitment to customers,
shared history and Latin American identity will not.
After careful consideration, LATAM is confident that the Chapter
11 reorganization process is the best path forward to achieve the
group's objectives and meet its obligations while comprehensively
managing its fleet and addressing its debts, most of which are held
in the United States. Importantly,
this process is markedly different from the concept of
"quiebra", "bancarrota", or liquidation. LATAM
intends to rely on specific relief that will allow it to pay its
employees, meet benefit obligations, pay critical suppliers and
conduct other day-to-day business operations as the group works
with the court and creditors to resolve its case. With Chapter 11
protection, the group's management team will remain in place and
will continue to lead LATAM through the reorganization and
transformation process.
These unique provisions of the Chapter 11 reorganization process
will enable the group to minimize disruptions to the business and
protect the interests of stakeholders while it restructures its
balance sheet to emerge as a more agile, resilient and sustainable
airline group.
While most of LATAM's affiliates are included in the
reorganization process, several entities are not, due to the nature
of their debt structure and current financial status. A full list
of filing entities is available at cases.primeclerk.com/LATAM. The
list below summarizes the inclusion of these entities in the
Chapter 11 financial reorganization and other proceedings.
Material filing entities:
- Chile: LATAM
Airlines Group S.A. and certain other entities incorporated
in Chile are included in the
Chapter 11 filing and will also file recognition proceedings in
Chilean Courts in order to ensure that the Chapter 11 process is
given full credit and effect, providing even greater protection to
LATAM's businesses.
- Colombia: LATAM
Airlines Colombia and other entities incorporated in Colombia are included in the Chapter 11 filing
and will also file recognition proceedings in the
Superintendencia de Sociedades in order to ensure that the
Chapter 11 process is given full credit and effect, providing even
greater protection to LATAM's businesses.
- Peru: LATAM Airlines Perú and
other entities incorporated in Peru are included in the Chapter 11 filing and
are also filing a "Preventative Reorganization Process" with
INDECOPI in order to ensure to these businesses are further
protected from adverse actions of creditors.
- Ecuador: LATAM
Airlines Ecuador is included in the Chapter 11 filing.
- United States:
All of the group's operating entities, other than special purpose
vehicles, in the United States are
included in the Chapter 11 filing.
Non-filing entities
- Argentina, Brazil and Paraguay: LATAM's affiliates in
Argentina, Brazil and Paraguay are not included in
the Chapter 11 filing. LATAM's affiliates in Brazil are in discussions with the Brazilian
government about the next steps and financial support for their
Brazilian operations.
Importantly, whether included in the filing or not, all of the
companies in the group will continue to operate as travel
restrictions and demand permit.
Additional Information
LATAM Airlines Group and its affiliates understand that their
employees around the world, their families, their suppliers and
customers will have many questions. While LATAM may not have all
the answers at this point, the group will be guided by transparency
in all its interactions. The group has created a dedicated website:
www.LATAMreorganizacion.com, where stakeholders can find additional
key information about what this announcement means for them.
LATAM has also established a hotline for Chapter 11-related
inquiries, which can be accessed at (929) 955-3449 or (877)
606-3609 in the U.S. and Canada.
International toll-free numbers will be available on
www.LATAMreorganizacion.com in the coming days. It also has a
dedicated email for inquiries related to the reorganization at
lataminfo@primeclerk.com.
LATAM is advised in this process by Cleary Gottlieb Steen & Hamilton LLP and
Claro & Cia. as legal advisors, FTI Consulting as financial
advisor and PJT Partners as investment banker.
Forward Looking Statements
This report contains
forward-looking statements. Such statements may include words
such as "may" "will," "expect," "intend," "anticipate," "estimate,"
"project," "believe" or other similar expressions.
Forward-looking statements are statements that are not historical
facts, including statements about our beliefs and
expectations. These statements are based on LATAM's current
plans, estimates and projections and, therefore, you should not
place undue reliance on them. Forward-looking statements
involve inherent known and unknown risks, uncertainties and other
factors, many of which are outside of LATAM's control and difficult
to predict. We caution you that a number of important factors
could cause actual results to differ materially from those
contained in any forward-looking statement. These factors and
uncertainties include in particular those described in the
documents we have filed with the U.S. Securities and Exchange
Commission. Forward-looking statements speak only as of the date
they are made, and we undertake no obligation to update publicly
any of them, whether in light of new information, future events or
otherwise.
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SOURCE LATAM Airlines Group S.A.