Minor shareholders of LATAM Airlines Group that hold American Depositary Receipts (ADRs) have asked the Chilean financial markets regulator (CMF) to investigate the ongoing closure of the airline group's ADR programme.

The group, on November 21, 2022, met with CMF President Solange Berstein. Those present included Maria Jordan Herrera, Miguel Alejandro Chajtur, Susana Mansilla, and Guillermo Martínez, who hold LATAM ADRs. The first three are partners in Inmobiliaria y Administradora CGL, reported Chilean media. ADRs are US bank-issued certificates representing shares in a foreign company for trade on American stock exchanges.

On November 10, 2022, LATAM Airlines Group, in a statement, clarified that its current ADR programme with JP Morgan as depositary bank, would stay closed until further notice for issuances of new ADRs (ordinary shares in Chile flowing into the US as ADRs) and open for cancellations (converting current ADRs back into ordinary shares in Chile).

"As a result of filing for relief under US Chapter 11 on May 26, 2020, LATAM delisted its ADR programme from the New York Stock Exchange (NYSE) and, as a result, currently, its ADRs continue to trade only on the OTC [over-the-counter] market under the ticker 'LTMAY' at a 1-to-1 ratio between an ADR and ordinary shares."

LATAM said it intended to relist on the NYSE in the future and was continually evaluating the right timing to do so, but this would, realistically, not happen within six months of exiting Chapter 11.

"As to any disparity between the trading prices of ADRs in the OTC markets and the price of shares in the Chilean market, the same may bear some relation with the absence of adequate perception around the very substantial dilution from the convertible notes and equity rights offerings in connection with the exit," it said.

Before it emerged from Chapter 11 and received a capital increase, LATAM Airlines Group had 606,407,693 shares outstanding. As part of its reorganisation plan, it increased its equity capital to USD10.3 billion, resulting in the issuance of an additional 605,801,285,307 shares of stock, which represented a dilution to existing holders of 99.9%.

Out of the total capital increase, USD800 million divided into 73,809,875,794 shares were placed for cash and the remaining USD9.5 billion representing underlying 531,991,409,513 shares were placed via three different classes of convertible notes.

New common stock resulting from LATAM's capital increase of USD800 million and the conversion of about USD9.5 billion of convertible notes will trade freely on the Santiago Stock Exchange.

LATAM Airlines Group exited bankruptcy protection last month following the successful completion of its financial restructuring to emerge as a more efficient group with a modernised fleet, a strengthened financial position of more than USD2.2 billion of liquidity and USD3.6 billion or 35% less debt.