Latam Airlines US$760m block sale has local flavour
Former creditors of the once bankrupt Latam Airlines pocketed US$766.8m through a block sale of stock overnight on Wednesday, a move that comes a little more than a year after the Chilean carrier went public on the NYSE.
JP Morgan and Barclays were able to increase the size of their purchase to 18m American Depositary Shares priced at US$42.60, the lower half of the US$42.40–$43.00 range marketed overnight and a 4.8% discount to the US$44.75 Wednesday closing price. That was an increase from the 15m shares the banks had committed to purchase.
The Chilean carrier’s NYSE-listed ADSs closed on Thursday post-pricing at US$43.74.
Selling shareholders Sixth Street Partners and Strategic Value Partners continued to trim their stakes inherited as part of Latam Airlines’ emergence from bankruptcy in 2022, having previously sold 10m ADSs in June.
The latest sale reduced their combined stake to 25% from 31.6%. The firms are free to sell again in 30 days.
The enlarged offering size, which equates to almost 28 days' worth of Latam Airlines' average trading volume, turned out to be not as risky as it might have seemed.
Ahead of the public launch, the banks wall-crossed investors with details of the planned selldown. That allowed them to place 65% of the offering with local Chilean investors, including pension funds, a banker involved in the offering told IFR.
The offering comes on the heels of Latam Airlines' robust second-quarter earnings for the period ending June 30. The carrier reported second-quarter net earnings of US$242m while growing revenues by 8.5% to US$3.3bn.
Latam Airlines has flourished since emerging from bankruptcy. In the second quarter, it paid out US$293m in dividends and repurchased US$152m of stock.
In June, the company's board approved another share buyback programme to repurchase up to 3.4% of the outstanding shares.
Latam Airlines went public in July last year through a US$456m NYSE IPO priced at US$24 a share. Goldman Sachs, Barclays and JP Morgan were joint bookrunners on that offering.
Delta Air Lines, Qatar Airways and Chile-based investment firm Costa Verde Aeronautica, which weren't among the selling shareholders, are prohibited from selling their combined 25% stake in Latam Airlines until November 2026.