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SANTIAGO: LATAM Airlines, Latin America’s largest, on Saturday announced terms of a financial reorganization plan that includes an $8.19 billion injection to help it exit bankruptcy under US law.

“Although our process is not yet complete, we have reached a fundamental milestone on the road to a stronger financial future,” company CEO Roberto Alvo said in a statement.

LATAM said its $8.19 billion would come through a combination of fresh capital, convertible bonds and debt, allowing it to exit Chapter 11 under US bankruptcy law.

Chapter 11 allows a company unable to pay its debts to reorganize without pressure from creditors.

Created in 2012 by the merger of Chile’s LAN and Brazil’s TAM airlines, LATAM filed for Chapter 11 protection in May after continent-wide confinement measures to contain the coronavirus forced it to reduce its operations by 95 percent.

In September, a New York court approved a $2.45 billion bankruptcy loan package to help LATAM, which had laid off thousands of workers and closed its Argentine subsidiary in money-saving steps.

The airline’s plan still requires approval at a US court hearing set for January, and in a final confirmation hearing two months later.

At that point, LATAM is expected to have total debt of about $7.26 billion and liquidity of $2.67 billion.

LATAM has subsidiaries in Chile, Colombia, Ecuador, Peru and the United States.

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