Double blow for LATAM as shares plummet 85% and Azul withdraws bid citing valuation concerns

LATAM ©AirTeamImages

Santiago, Chile-based LATAM Airlines Group S.A. (LATAM), South America’s largest air transportation group, saw its Chilean stock exchange share value plummet by 85% on Friday on the announcement of a restructuring programme that would see shares heavily diluted, though this loss was pared back to 45% by the close of trading.

The Group was proposing a US$8.19 billion injection of capital in an effort to exit from Chapter 11 bankruptcy. The proposal included a mix of new equity, convertible notes and debt, while LATAM also intends to launch an US$800 million equity rights offering to shareholders once the restructuring plan has been confirmed.

In addition, Brazil’s Azul SA announced this Monday that it has withdrawn its non-binding proposal, submitted on November 11, to combine with LATAM and which had included approximately US$5 billion in equity financing, backed by some creditors of LATAM. Azul withdrew its offer citing that LATAM’s valuation in the bankruptcy proceedings had become higher than it found acceptable, also citing ongoing uncertainty in the aviation industry amid the COVID-19 pandemic, especially in long-haul markets.

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