LATAM Secures Chapter 11 exit financing |

During the weekend, LATAM Airlines Group announced it had signed debt commitment letters with different financial entities, securing an exit financing from its Chapter 11 process. The airline is currently awaiting the ruling of the United States Court regarding its Reorganization Plan. Securing Chapter 11 exit financing After an exhaustive search process, LATAM signed debt commitment letters with various financial entities, which represents a sign of market confidence in LATAM. This step allows the airline group to continue towards emerging from the Chapter 11 process during the second half of 2022. LATAM has been in a bankruptcy process since May 2020 due to the impact of the COVID-19 pandemic. Of the three Latin American airlines that filed for bankruptcy protection in the US, LATAM is the only one remaining in Chapter 11 so far. Avianca exited last year and Aeromexico in March 2022. LATAM’s exit financing is part of the restructuring contemplated in the Reorganization Plan. It considers a new debt of US$2.25 billion and a new credit facility of US$500 million. It is subject to the approval of the United States Court. The airline signed commitment letters with JPMorgan Chase Bank, N.A., Goldman Sachs Lending Partners LLC, Barclays Bank PLC, BNP Paribas, BNP Paribas Securities Corp., and Natixis, New York Branch. The exit finance commitment letters also provide for US$1,172 million in debtor-in-possession (DIP) financing with a lesser repayment preference than the exit financing for the duration of the Chapter 11 proceedings (i.e., prior to exit) ("Junior DIP Financing"). Delta Air Lines, Inc., Lozuy S.A., Costa Verde Aeronáutica S.A., QA Investments Limited, and members of LATAM's ad hoc group of creditors represented by Evercore are among the financial institutions with which the commitment letter for the Junior DIP Financing was signed. How’s the exit financing structured? LATAM’s Exit Financing has been structured as a debtor-in-possession financing to be provided during the Chapter 11 process. It has been structured to remain in place after LATAM emerges from the bankruptcy process. Once LATAM meets the exit date from Chapter 11, the Exit Financing will automatically convert into financing. The exit financing is structured as follows: US$500 million Exit Revolving Facility, which will accrue interest at LATAM's election, either: (i) ABR plus an applicable margin of 3.00%; or (ii) SOFR rate plus an applicable margin of 4.00%. US$750 million Term B Loan Facility, which will accrue interest at LATAM's choice, either: (i) ABR plus an applicable margin to be determined at the time of allocation thereof; or (ii) SOFR rate plus an applicable margin to be determined at the time of allocation thereof. US$750 million Bridge to 5Y Notes Facility Proposal US$750 million Bridge to 7Y Notes Facility Proposal The interest rate for the bridge loans indicated above will be determined based on market conditions available at the time of closing. What LATAM is saying Roberto Alvo, the LATAM CEO, said: "This commitment secures us the full amount of financing required to complete our restructuring plan and, very importantly, with a degree of flexibility that allows us to optimize existing market conditions. The US$2.25 billion of debt is in addition to the US$5.4 billion of equity we secured in January of this year. This is another important step towards emerging from Chapter 11 as a strengthened airline group.” The airline is currently awaiting the ruling of the US Court. LATAM’s Reorganization Plan has substantial support from the creditors, representing 90% of the airline’s unsecured claims.

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