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Chile’s Latam Airlines Group hires PJT Partners to restructure debt: report

FILE PHOTO: LATAM airlines logo, is seen inside of the Commodore Arturo Merino Benitez International Airport in Santiago, Chile April 25, 2019. REUTERS/Rodrigo Garrido

SAO PAULO (Reuters) – Chile’s Latam Airlines Group SA (LTM.SN) has hired U.S. investment boutique PJT Partners to explore debt restructuring options that may include bankruptcy protection filings in three countries, Brazilian newspaper O Estado de S. Paulo reported late on Monday.

According to the paper, which cites sources with knowledge of the matter, Latam is considering filing for Chapter 11 in the U.S. and equivalent bankruptcy protection in Chile and Brazil, where are the company’s largest operations.

In a statement to Reuters, Latam said it “does not comment on speculation” and that if it had something to report, it would do through official channels with regulators.

PJT Partners did not immediately reply to a request for comment late on Monday.

LATAM was downgraded by S&P and Fitch on Friday after the company confirmed it did not pay interest and principal on three tranches of 2015 $1 billion enhanced equipment trust certificates (EETC).

Now the company has 15 days to resolve the payment or it can be declared in default by creditors according to cross default clauses.

In a Monday report, credit research company Lucror Analytics said the chances for a debt restructuring transaction or bankruptcy protection filing were rising.

Lucror estimates LATAM is burning through around $7 million in cash daily in the second quarter and had $1.3 billion in cash in April.

Lucror notes, though, that the company may receive support from Brazilian development bank BNDES, although the credit could take time to materialize and the loan could only be used to support LATAM’s Brazilian operations. Financial support is not expected from Delta Air Lines, which owns 20{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} of LATAM’s shares.

Reporting by Tatiana Bautzer and Marcelo Rochabrun in Sao Paulo; Editing by Kim Coghill

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