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Sources say that the Brazilians, former TAM controllers, did not agree with setting a conversion price during the negotiation with creditors.
An unexpected twist was the formation of the current investors in tranche C of DIP (Debtor in Possession) financing of Latam Airlines, since not only were foreign lenders – Knighthead and Jefferies – included in the equation, but also the Amaro family, former TAM controllers, left, of the loan for US $ 2.45 billion that seeks to float the Chilean-Brazilian flag airline.
In renewed financing DIP crossed out the mention that referred to the Brazilian family (Amaro Group) and only named the rest of the shareholders: the Cuetos, Eblen and Qatar Airways.
A lawyer linked to the process and knowledgeable about the negotiations, commented that This occurred mainly because the Amaros would have rejected the idea of having a fixed conversion price in an eventual capital increase That could be triggered if the airline decides to pay its debt on company papers. This value would be defined later, in conjunction with the creditors and once the reorganization process is completed.
However, Other sources explained that the underlying reason is the long extension of the DIP financing negotiation, that it would not conform to the “timing” of the owners of Brazilian origin.
Regardless of the reason that prompted the Amaro family to abandon Latam Airlines’ most difficult flight, shareholders could later return to the idea of entering the reorganization, by buying a creditor’s debt.
In this case, it could be Knighthead or Jefferies, who, being restricted to remain in the ownership of the airline, by signing a Letter Agreement (commitment to sell their credit in case the company decides to transform their debt into action), the would put it back on the run.
The aforementioned would prevent you from being diluted and could even increase your equity interest in the airline. This, in a context where the Amaro family has been reducing its direct participation in the company, later joining Costa Verde.
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