Carlos Heller is raining on wet. In two years he has suffered the collapse of his heritage. The 9.4% that Falabella controls now is worth about $600 million, a third of what it was worth in 2018. The collapse has been quick. Six months ago it was worth $1.3 billion and two years ago almost $2 billion.
Worse he’s been with Latam. A business in which he invested $600 million and is now worth virtually zero. Latam and Falabella account for 80% of Bethia’s investments, the company through which Solari-Heller manages their businesses.
Heller joined Latam in 2010, when he bought his stake from Sebastián Piñera, who was forced to sell when he took office on his first step in La Moneda.
Piñera paid a little more than $450 million for the airline’s 8%. The transaction was controversial, as the transaction was made through Axxion, a company of the President and that allowed the current Representative to save around US$73 million in capital gains taxes.
Two years after entering Latam’s property, Bethia paid $88 million for an additional 1% of the airline. Thus, at the end of 2012 he controlled about 9% of the company and Carlos Heller had secured a seat in his Board of Directors.
The company is now bankrupt, the shares are worth nothing, and Heller has already lost its place on the Board since Delta entered.
In this scenario, it should be added that the investment generated very few dividends, since in the 10 years when Bethia has been a shareholder in Latam, the airline has had significant losses in almost all, so it has distributed few dividends since the merger with TAM was finalized in 2012.
Of all that substantial investment, Heller was only able to recover $122 million when Delta Airlines entered Latam’s property, paying a 27% prize per share, with Bethia paying for Piñera’s package in 2010. It also recovered some of its original investment in 2016, when Qatar Airways bought 10% of the airline, but for that operation the Arab company paid 60% less per share than Delta paid.
It also generated a $50 million profit when it sold Blue Express, a logistics business that came to control when it entered Latam’s property.
In the current Chapter 11 scenario in the United States, Bethia will have to decide whether to contribute to the company’s “reorganization” process, as already announced by the controllers (Cueto Family) and Qatar Airways. This would be just to not be diluted, to be part of the new structure that emerges from Chapter 11, betting that the firm will be able to stand, “fly” and, with that, recover some of the invested. But in the market they rule it out. They claim that Heller and Bethia have no box to inject new funds and remain part of society.
A source close to the transaction, quoted in La Tercera, states that it is likely that current shareholders will disappear and there will be new ones, “that will be the ones who put fresh silver in this process”.
Moreover, anything the State of Chile does to support Latam will not necessarily include benefits to current shareholders or their current creditors.
