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Saturday, December 3, 2022

LATAM Airlines Group SA (OTCMKTS: LTMAQ) Powerful Run Northbound as Airline Set to Emerge from Bankruptcy on November 3rd

LATAM Airlines Group SA (OTCMKTS: LTMAQ) is skyrocketing up the charts in recent trading from well under a dime to recent highs over $0.50 per share after the Company reported it would exit bankruptcy on November 3. BK stocks has a long history of making highly explosive moves once on the OTC. We covered American Airlines BK here on Microcapdaily and the stock saw spectacular gains running well over 1000%. While LTMAQ is emerging from Bankruptcy Nov 3rd it is unclear if commons will survive. A new equity could be issued in connection with LATAM’s reorganization, that will transfer, exchange and/or assign respective ERO New Common Stock or the commons could come out of bankruptcy intact. 

LATAM Airlines filed for Chapter 11 bankruptcy in the United States on May 26, 2020, due to economic problems attributed to the impact of the COVID-19 pandemic on aviation. Although LATAM Airlines’ headquarters are located in Chile, the carrier is an American depositary receipt and traded on both the Santiago Stock Exchange and New York Stock Exchange at the time of bankruptcy. The company’s stock ticker (LTMAQ) was unlisted from the NYSE and later moved to the unregulated OTC Markets Pink on June 12, 2020. 


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LATAM Airlines Group SA (OTCMKTS: LTMAQ) is an airline holding company headquartered in Santiago, Chile. It is considered the largest airline in Latin America with subsidiaries in Brazil, Colombia, Ecuador, Paraguay and Peru.  

On August 9 LTMAQ reported its consolidated financial results for the second quarter of the year, which reflect a gradual recovery of the operation, reaching a consolidated capacity (measured in ASK) of 72.6% compared to 2019 levels, which in turn represents more than double the capacity of the same quarter of 2021, growing by 135.2%. This recovery of capacity is mainly explained by the solidity of the domestic markets in Brazil, Colombia and Ecuador, in addition to the recovery of international operations, and takes place in a context marked by a sharp increase in fuel prices. 

During the period, the group’s total operating revenues reached US$2.226 billion, 6.1% less than in 2019, but showed an increase of 150.5% compared to last year. In turn, total operating expenses increased by 3.5% compared to the same quarter of 2019, driven by a 31.5% increase in the Fuel cost line in the quarter compared to the same period of 2019. 

Roberto Alvo, CEO of LATAM Airlines Group, commented that “we have closed a second quarter with significant progress in our reorganization process under Chapter 11 and we hope to emerge from it during the last quarter of this year. Although the group has made advances in its operational recovery, we continue to remain cautiously optimistic about the coming months, closely monitoring fuel prices and macroeconomic variables, as the industry still finds itself in the midst of a very dynamic environment.” 

During the period, LATAM Group obtained the approval of its Reorganization Plan by the United States Bankruptcy Court and secured its exit financing. 

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LTMAQ

On October 15 LTMAQ announced it is prepared to exit bankruptcy on November 3. The Company detailed a financing plan on Wednesday that the company hopes will finalize its exit from bankruptcy in the first week of November. The company filed for Chapter 11 in 2020 after airline travel plummeted during the pandemic and won court approval that June. The reorganization plan would inject about $8 billion into the airline through a combination of capital increase, issue of convertible bonds and new debt. 

In a note sent to the market regulator late Tuesday night, LATAM detailed the structure of its exit financing that includes a $500 million revolving credit facility and a five-year term loan facility of $1.1 billion. It also includes $450 million in senior secured notes due in 2027 and $700 million in senior secured notes due in 2029 as well as $750 million five-year bridge-to-notes and another $750 million in seven-year bridge-to-notes.

“In the coming weeks we expect to emerge from Chapter 11 with approximately U.S.$2.2 billion of liquidity and a debt reduction of approximately 35% compared to the debt we had outstanding before entering into this process,” LATAM’s CEO Roberto Alvo said in a press release.

The company intends to underwrite the bridging credit lines, the revolving credit line and the term financing on Wednesday. In addition, the offering of the bonds is expected to close on Oct. 18. 

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LTMAQ is skyrocketing up the charts in recent trading from well under a dime to recent highs over $0.50 per share after the Company reported it would exit bankruptcy on November 3. BK stocks have a long history of making highly explosive moves once on the OTC. We covered American Airlines BK here on Microcapdaily and the stock saw spectacular gains running well over 1000%. While LTMAQ is emerging from Bankruptcy Nov 3rd it is unclear if commons will survive. A new equity could be issued in connection with LATAM’s reorganization, that will transfer, exchange and/or assign respective ERO New Common Stock or the commons could come out of bankruptcy intact. LATAM Airlines filed for Chapter 11 bankruptcy in the United States on May 26, 2020, due to economic problems attributed to the impact of the COVID-19 pandemic on aviation. Although LATAM Airlines’ headquarters are located in Chile, the carrier is an American depositary receipt and traded on both the Santiago Stock Exchange and New York Stock Exchange at the time of bankruptcy. The company’s stock ticker (LTMAQ) was unlisted from the NYSE and later moved to the unregulated OTC Markets Pink on June 12, 2020.We will be updating on LTMAQ when more details emerge so make sure you are subscribed to Microcapdaily.

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Disclosure: we hold no position in LTMAQ either long or short and we have not been compensated for this article.

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