SCHEDULE 13D/A: Strategic Value Partners Group Reduces Stake in LATAM Airlines Through $133 Million ADS Offering, Enters 45-Day Lock-Up

Strategic Value Partners, LLC and its affiliated funds have sold 3,646,741 American Depositary Shares of LATAM Airlines Group S.A. for approximately $133.3 million and entered into a 45-day lock-up agreement following the underwritten offering.

Summary

• Strategic Value Partners, LLC and its affiliated funds (the "Funds") completed the sale of 3,646,741 American Depositary Shares (ADSs) of LATAM Airlines Group S.A. in an underwritten offering.
• Each ADS represents 2,000 shares of Common Stock without par value.
• The ADSs were sold to J.P. Morgan Securities LLC, the Underwriter, at a price of $36.55 per ADS.
• The Underwritten Offering closed on June 18, 2025.
• Following the sale, the Funds, including Strategic Value Partners, LLC and Victor Khosla, beneficially own an aggregate of 76,307,210,279 shares of Common Stock, representing 12.6% of the class.
• The ownership percentage is calculated based on 604,441,789,335 shares of Common Stock outstanding as of June 17, 2025.
• The Funds have entered into a lock-up agreement restricting further sales or hedging of Lock-Up Securities for a period of 45 days after the date of the final prospectus related to the Underwriting Agreement, starting June 16, 2025.

Sentiment

Score: 5

Explanation: The document is a factual disclosure of a completed transaction and ownership change, with no explicit positive or negative sentiment expressed by the issuer or reporting persons. The implications of the sale (liquidity for seller, potential supply pressure) are neutral in the context of the filing itself.

Positives

• The successful completion of the underwritten offering provides liquidity for the selling shareholders (Strategic Value Partners and affiliated funds).
• The offering was conducted pursuant to an automatic shelf registration statement, indicating a streamlined process for capital market access.
• The lock-up agreement helps stabilize the market by preventing immediate additional sales from the reporting persons, which can be positive for other shareholders.

Negatives

• The sale of a significant number of ADSs by a major shareholder could be perceived as a reduction in their conviction or a move to realize gains, potentially leading to negative market sentiment.
• A large secondary offering can sometimes create downward pressure on the stock price due to increased supply in the market.

Risks

• The lock-up agreement, while standard, highlights the potential for future sales by the reporting persons once the 45-day period expires, which could introduce future supply-side pressure on the stock.
• The market's reaction to a significant shareholder reducing its stake could lead to short-term price volatility for LATAM Airlines Group S.A. ADSs.

Future Outlook

The reporting persons are subject to a 45-day lock-up period, restricting further sales or hedging activities related to LATAM Airlines Group S.A. securities. Additionally, a potential share repurchase program by the Company is subject to shareholder approval at a meeting scheduled for June 26, 2025, which could impact future share dynamics.

Industry Context

This filing details a secondary offering by a significant institutional investor in LATAM Airlines Group S.A. Such offerings are common mechanisms for large shareholders to realize value from their investments and can contribute to the liquidity of a company's shares in the market. While not directly indicative of broader airline industry trends, it reflects capital allocation decisions by major investors within the sector.

Related Party Transactions

• The transaction involves the sale of ADSs by a group of affiliated entities (the Funds) to an underwriter, which is a common arrangement in secondary offerings. The Funds are related parties to each other and are significant shareholders of LATAM Airlines Group S.A.

Stakeholder Impact

• **Shareholders:** The offering provides liquidity for the selling shareholders (Strategic Value Partners group). Other shareholders may experience short-term price volatility due to the increased supply of ADSs in the market, though the lock-up agreement aims to mitigate immediate further pressure.
• **Company (LATAM Airlines Group S.A.):** The offering does not directly raise capital for the company but can increase the public float and liquidity of its ADSs, potentially broadening its investor base.

Next Steps

• The lock-up period for the reporting persons will continue for 45 days after the final prospectus date, restricting further sales of LATAM Airlines Group S.A. securities.
• LATAM Airlines Group S.A. shareholders are scheduled to vote on a share repurchase program at an extraordinary meeting on June 26, 2025.

Key Dates

Keywords

LATAM Airlines Group S.A., American Depositary Shares, ADS, SEC filing, Schedule 13D, Strategic Value Partners, Underwritten Offering, Secondary Offering, Lock-up Agreement, Shareholder Stake, Equity Sale, Investment Management