A group of LATAM Airlines Group SA bondholders is in talks to offer up to $1.5 billion in a loan within the U.S. Chapter 11 bankruptcy proceeding.
This was reported this Thursday by the Reuters agency based on information provided by two people with knowledge of the matter.
The creditor group, which includes Blackrock Inc, Australia’s Macquarie group, HSBC and Chile’s Moneda Asset Management, hired investment bank Moelis & Co to watch the talks.
The exact value of the creditor loan will be defined during the talks, but is expected to be within the range of $1 billion to $1.5 billion, the sources added.
It should be noted that under the concept of Debtor in Possession (DIP) the new creditors are facilitating resources through “new debt”, which has the preferred character. Therefore, in the event that the undertaking actually breaks, these loans would have preference over the old debt. In addition, this new debt, in the DIP form, could be capitalized at a preferential price that could be the market price per day of the agreement, explain market sources.
High hermetism
LATAM bondholders and Moelis did not immediately comment on the matter. Blackrock didn’t mean either.
LATAM filed for bankruptcy last month, with the goal of restructuring $18 billion of debt. The airline has been the largest in the world to date to seek an emergency restructuring due to the coronavirus pandemic.
The company said at the time that its shareholders the Cueto Group and Qatar Airways had committed to supplying $900 million in additional funding, but that its goal was to raise up to $2.5 billion to support the operations.
