Latam Airlines seeks approval of amended $3.3 billion DIP financing

By Sarah Lizee

Olympia, Wash., Feb. 22 – Latam Airlines Group, SA is seeking court approval of an amended and restated $3.3 billion of debtor-in-possession financing, according to a motion filed Friday with the U.S. Bankruptcy Court for the Southern District of New York.

Chief financial officer Ramiro Alfonsin Balza said that in view of the approaching maturity date of the initial DIP facilities, the debtors began exploring in January and February the opportunity to obtain financing for the remainder of the Chapter 11 cases, which are expected to extend for several months after the initial maturity date of the loans.

The debtors are now seeking approval of the amended and restated DIP facility, including the replacement tranche C facility, which will allow the debtors to access up to $3.3 billion in liquidity on terms more favorable than under any available alternative.

The facility consists of a $1.3 billion trance A facility, a $750 million tranche B facility and a $1.25 billion replacement tranche C facility.

Interest on the tranche A and B loans is Libor plus 950 basis points, and interest on the tranche C loans is Libor plus 1,200 bps.

The replacement tranche C lenders are certain funds managed by Oaktree Capital Management, LP, Apollo Capital Management, LP, QA Investments Ltd., Costa Verde Aeronautica SA, Lozuy SA and Delta Air Lines, Inc.

The DIP agents are Bank of Utah as administrative agent, Banco Santander Chile as Chile local collateral agent, TMF Brasil Administracao e Gestao de Ativos Ltda. as Brazil local collateral agent, TMF Colombia Ltda. as the Colombia local collateral agent, TMFEcuador, SA as Ecuador local collateral agent and Fiduperu SA Sociedad Fiduciaria as Peru local collateral agent.

“Latam is still operating substantially below its pre-crisis passenger capacity,” the CFO said in a declaration.

“The continued impacts of Covid-19 have made it necessary for Latam to have access to DIP financing to partially fund its operational and other needs during the pendency of these proceedings absent further market improvements.”

A hearing is scheduled for March 10.

Latam Airlines is a Santiago, Chile-based airline. The company filed bankruptcy on May 25, 2020 under Chapter 11 case number 20-11254.

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