Latam obtains millionaire financing from 7 banks recovering from bankruptcy

Latam has signed an undertaking with JPMorgan Chase Bank, Goldman Sachs Lending Partners LLC, Barclays Bank PLC, BNP Paribas, BNP Paribas Securities Corporation and Natixis New York Branch to secure $1 million in funding and complete its bankruptcy exit process .

The airline Latam Airlines Group confirmed this Sunday that it has signed financing commitment letters to exit its bankruptcy process with seven banking entities, which translates into a new committed line of credit worth 500 millions of dollars.

The company said in a statement that the financing contemplates $2.250 million in new debt and would be the final step in the US bankruptcy law process.

The airline took advantage of this law in May 2020 due to the covid-19 pandemic, a formula that allows a company that cannot pay its debts to restructure without pressure from creditors.

The 7 banks that signed with Latam

The financial entities with which the exit financing commitment letters have been signed are JPMorgan Chase Bank, Goldman Sachs Lending Partners LLC, Barclays Bank PLC, BNP Paribas, BNP Paribas Securities Corporation and Natixis New York Branchdepending on the group.

“This commitment assures us of all the necessary funding to carry out our restructuring plan and with a degree of flexibility that allows us to optimize existing market conditions,” said the airline’s CEO, Roberto Alvo.

This exit financing also provides $1,172 million to be granted during the validity of the Chapter 11 process (i.e. before its exit) in the form of DIP (debtor-in-possession) financing.

Latam, born in 2012 from the merger between Chilean Lan and Brazilian Tam, flew before the pandemic to 145 destinations in 26 countries and operated around 1,400 daily flights, carrying more than 74 million passengers a year.

With the health crisis, the company reduced its operations by up to 95% and ended 2020 with a decline in operating income of 58.4% and a net loss of $4,545.9 million.

Earlier this month, it reported a projection of its passenger operation up to 70% compared to the same month of 2019 in a pre-pandemic scenario. This is the highest number so far this year on the verge of leaving Chapter 11 of US bankruptcy law in May.

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