Delta eyes new debt to help fund $1.9 billion purchase of Latam stock

By Devika Patel

Knoxville, Tenn., Oct. 10 – Delta Air Lines, Inc. plans to use newly issued debt and available cash to fund a planned $1.9 billion acquisition of 20% of Latam Airlines Group SA common stock through a public tender offer at $16 per share.

In addition, Delta will invest another $350 million to establish a strategic partnership, $150 million of which was paid in the current quarter.

Delta will also acquire four A350 aircraft from Latam and has agreed to assume Latam’s commitment to purchase 10 additional A350 aircraft.

“This recent transaction with Latam is an exciting opportunity for Delta and is an example of how our balance sheet enables strategic moves that expand our competitive strengths,” executive vice president and chief financial officer Paul Jacobson said on the company’s third quarter ended Sept. 30 earnings conference call on Thursday.

Cash and cash equivalents were $1.9 billion as of Sept. 30, 2019, compared to $1.38 billion as of Sept. 30, 2018.

Long-term debt and finance leases were $7,923,000,000 as of Sept. 30, 2019, compared to $8,253,000,000 as of Sept. 30, 2018.

At the end of the quarter, the company’s adjusted debt to EBITDAR was 1.7x, at the low end of its target leverage ratio range of 1.5x to 2.5x.

Delta is a commercial airline based in Atlanta. Latam is a Santiago-based airline.

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