Latam Airlines gets OK of improved $3.7 billion DIP financing

By Sarah Lizee

Olympia, Wash., March 16 – Latam Airlines Group, SA received court approval of an amended and restated $3.7 billion debtor-in-possession financing package, according to court documents filed Tuesday with the U.S. Bankruptcy Court for the Southern District of New York.

The financing now includes a $2.05 billion replacement tranche A facility that will replace both the existing tranche A and B facilities, and a $1.65 billion replacement tranche C facility.

JPMorgan Chase Bank, NA is the bookrunner, lead arranger and administrative agent, and Bank of Utah as collateral agent.

Interest for the tranche A loans will be SOFR plus 750 basis points, and interest for the tranche C loans will be SOFR plus 1,300 bps if paid in cash and SOFR plus 1,350 bps if paid in kind.

The facilities will mature on Aug. 8.

Previous proposals

With the company’s previous DIP facilities coming due in April, Latam began exploring financing options in January. In February, it sought approval of a $3.3 billion financing package that included a replacement tranche C facility with Oaktree Capital Management, LP, Apollo Capital Management, LP, QA Investments Ltd., Costa Verde Aeronautica SA, Lozuy SA and Delta Air Lines, Inc. as lenders.

The financing consisted of a $1.3 billion tranche A facility and a $750 million tranche B facility at Libor plus 950 bps, and a $1.25 billion replacement tranche C facility at Libor plus 1,200 bps.

On March 7, the financing motion was amended to reflect changes in pricing so that tranche A loans whose interest was payable in cash at the end of each interest period would be Libor plus 975 bps, and tranche A loans whose interest was capitalized on a quarterly basis for payment on the maturity date would be Libor plus 1,100 bps. Interest on the tranche C loans was increased to Libor plus 1,500 bps, and interest on the tranche B loans remained Libor plus 950 bps.

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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