LATAM Airlines Group has successfully issued USD1.4 billion worth of secured notes, maturing in 2030 at an annual interest rate of 7.875%.
By refinancing its debt, LATAM will reduce its cost of debt while generating annual savings of approximately USD83 million in lower interest payments, the company said in a material fact filed to Chile’s financial market regulator (Comisión para el Mercado Financiero - CMF).
With the funds obtained from this issuance and USD200 million in cash, LATAM Airlines (LA, Santiago de Chile) expects to prepay a USD450 million note due in 2027 with an interest rate of 13.375%, as well as the Term Loan B of USD1.081 billion due in 2027 with an interest rate of about 15%. Both were part of the company’s Chapter 11 exit financing in 2022.
Additionally, with the USD200 million in cash, LATAM is looking to further reduce its gross debt levels which, at the end of the second quarter, totalled USD7.1 billion.
According to information on its website, LATAM has a second set of 13.375% senior secured notes due in 2029, worth USD700 million. It also has the opportunity to refinance these notes, according to its second-quarter financial results.
The South American group saw USD6.35 billion in overall operating revenue during the first half of 2024, with a net profit of USD390 million, 15.9% and 30.8% higher, respectively, than in the same period last year. The issuance of the secured notes will have a one-time impact on LATAM's income statement of approximately USD134 million, of which USD45 million will be reflected in cash movements during the fourth quarter of 2024.
