Chile-based ILAP’s pre-packaged plan effective as of Jan. 12

By Sarah Lizee

Olympia, Wash., Jan. 16 – Inversiones Latin America Power Ltda. (ILAP) had its pre-packaged Chapter 11 plan go into effect on Friday, according to a notice filed with the U.S. Bankruptcy Court for the Southern District of New York.

The plan was confirmed on Jan. 3.

As previously reported, the plan aims to restructure a balance sheet burdened by $408.73 million in principal amount of outstanding funded debt.

The plan is based on a restructuring support agreement reached with holders of about 84.5% of the aggregate outstanding principal amount of the senior debt claims.

Under the plan, the company’s $391.23 million of existing 5 1/8% notes due 2033 and $17.5 million of debt under a letter-of-credit facility with Citibank, NA as administrative agent will be exchanged for new notes to be issued under the plan, as described below.

New senior secured notes

On the plan effective date, the reorganized company was to issue $260 million of takeback senior secured notes to holders of senior debt claims.

The notes will mature June 15, 2033 and bear interest at 11½% PIK/9½% cash through Dec. 31, 2024, 12¼% PIK/10¼% cash from Jan. 1, 2025 through June 30, 2025, 13% PIK/11% cash from July 1, 2025 through the 24 months after the effective date, and 11% cash from the effective date to the maturity date.

New convertibles

On the plan effective date, $173.35 million of new convertible notes were to be issued to holders of senior debt claims.

The convertibles will bear interest at 5% per annum. Interest will be payable in kind automatically by increasing the principal amount of the convertibles by an amount equal to the amount of the PIK interest for the applicable interest period, rounded up to the nearest whole dollar.

The final conversion date will be Dec. 31, 2025, subject to an earlier date if certain events occur. A majority of the outstanding principal amount of the convertibles can waive or amend an event that would otherwise give rise to a conversion.

On the conversion date, the convertibles will convert into 90% of the total equity interests of the new issuer, with ILAP partners retaining the remaining 10%.

The holder of the LoC facility claims will agree to forfeit their rights to receive about $8.23 million of convertible notes in exchange for the issuance of the settlement takeback senior secured notes in the principal amount of $4.31 million.

New super-priority notes

On the plan effective date, the reorganized ILAP were to issue $14 million of senior secured notes with super priority relative to the takeback senior secured notes and convertibles.

The holders of the takeback senior secured notes who choose to provide additional financing to the company in the total amount of $10 million will be entitled to receive the super-priority notes.

The super-priority notes will bear interest at 12% per annum, subject to a 2% PIK premium if the company exercises its PIK option.

The super-priority notes will mature June 15, 2033.

UMB Bank, NA is the trustee for the new takeback notes and the super-priority notes.

Other terms

On the plan effective date, the new issuer, the reorganized debtors, the ILAP partners and the convertible notes indenture trustee were to enter into a sales facilitation agreement, through which the parties will agree to make their best efforts to sell 100% of the reorganized ILAP equity by Dec. 31, 2025.

Since the principal objective of the plan is to address the debt under the existing notes and facility, only those claims are impaired under the plan, with the interests in ILAP being technically impaired to implement the restructuring.

All other claims and interests, including all general unsecured claims and existing equity interests in the San Juan and Norvind subsidiaries, are unimpaired under the plan.

The energy company is based in Santiago, Chile. The company filed bankruptcy on Nov. 30 under Chapter 11 case number 23-11891.

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