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LATAM Airlines issues region’s first aircraft-backed EETCs

Por: Latin LawyerImprimirVisualizar em PDF

Clifford Chance LLP in New York, Greenberg Traurig LLP in Miami, Pinheiro Neto Advogados in São Paulo, Philippi Prietocarrizosa & Uría (Chile) and Maples and Calder in Grand Cayman have helped LATAM Airlines issue Latin America's first aircraft-backed enhanced equipment trust certificates (EETC) in a two-tranche offering worth US$1 billion.

Milbank, Tweed, Hadley & McCloy LLP in New York and Pinheiro Neto advised Citibank as the sole structuring agent, global coordinator and lead bookrunner for the deal, which closed on 1 June. TozziniFreire Advogados in São Paulo helped US rating agency Standard & Poor's on the offering's creditworthiness, while Pillsbury Winthrop Shaw Pittman LLP in New York represented French investment bank Natixis as underwriter. Delaware-based law firm Morris James LLP is thought to have advised the trust company, but this could not be confirmed prior to publication.

EETCs are corporate debt securities, which draw on the credit of a single issuer and are secured by using equipment (in this case aircraft) as collateral. LATAM Airlines is one of only six carriers to issue aircraft-backed EETCs outside of the US and the first to do so in Latin America. The Chilean holding company controls Brazilian airline TAM and Chilean flag carrier LAN, which completed a multi-billion dollar merger in 2012 to create Latin America's largest airliner.

Felipe Bonsenso Veneziano, an associate at Pinheiro Neto, explains aircraft-backed EETC issuances are rare outside the US, because their success depends on whether a rating agency gives them an attractive enough rating. This is largely determined on how easily the collateral can be repossessed. He says Chile's strong judicial environment and Brazil's recognition of the Cape Town Convention in 2013, which ties it to international legal frameworks on the repossession of moveable property, made the issuance possible.

Alexei Bonamin, a partner at TozziniFreire, expects more aircraft-backed EETC issuances in the future. "We understand that other airlines in Latin America will follow LATAM´s issue since rating agencies have frequently rated EETCs several notches higher than senior secured debt of an issuing airline," he says, alluding to their high rate of collaterisation.

Counsel to LATAM Airlines Group

  • Clifford Chance LLP - Partner Emily DiStefano, Gary Brooks and Philip Wagman, and associates Dennis Recca, Alan Kravitz, Jennie Benn, Olga Miller and Clark Spencer in New York
  • Greenberg Traurig LLP - Shareholders Jeffrey Tenen and Israel Sanchez in Miami
  • Pinheiro Neto Advogados - Partners Adolpho Julio de Carvalho and Fernando de Almeida Prado, and associate Felipe Bonsenso Veneziano in São Paulo
  • Maples and Calder - Partners Mark Western, Wanda Ebanks and Shari McField in Grand Cayman
Counsel to Citigroup Global Markets

Milbank, Tweed, Hadley & McCloy LLP - Partners Elihu Robertson, Arnie Peinado, James Pascale, Andrew Walker and Joel Krasnow, counsel Kevin MacLeod and Eschi Rahimi-Laridjani, and associates Kaveh Namazie, Stephanie Keats, Niels Jensen, Min Heo, Michael Goon and Robin Heszkel in New York

  • Pinheiro Neto Advogados - Partners Adolpho Julio de Carvalho and Fernando de Almeida Prado, and associate Felipe Bonsenso Veneziano in São Paulo

Counsel to Standard & Poor's

  • TozziniFreire Advogados - Partners Alexei Bonamin and Fábio Rosas in São Paulo

Counsel to Natixis

  • Pillsbury Winthrop Shaw Pittman LLP - Partner Mark Lessard and associate David Flickinger in New York

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