Inversiones Latin America Power Limitada (“ILAP” or the “Company”) – that manages the San Juan and Totoral wind farms in Chile – announced that it entered into a definitive restructuring agreement with the majority of its creditors, and filed for a voluntary prepackaged Chapter 11 proceeding in the U.S. Bankruptcy Court in the Southern District of New York on November 30, 2023.

Per the Company, the agreement has been entered into with more than 83.8% of the holders of the senior secured notes due 2033 and with Citibank, N.A. (“Citibank”) in its capacity as the sole lender under the letter of credit facility (the “LC Facility”). In this context, ILAP’s CEO Esteban Moraga emphasized, “we expect this will be an expedited and simplified process, considering that, after months of negotiation, we reached an agreement with the majority of our bondholders, which allows us to reprofile our financial obligations and implement a structural solution that provides the necessary liquidity to face the current and future market challenges.”

Under the agreement, the Company and its creditors agreed to exchange more than US$430 million of existing senior debt secured by the assets and cash flows from the San Juan and Totoral projects for approximately US$264 million of take-back senior secured notes (the “New Bonds”) and new convertible bonds for an amount equivalent to the remainder of the outstanding senior secured claims, which may be indirectly converted into 90% of ILAP’s equity under certain conditions under the agreement.

The restructuring increases ILAP's liquidity by significantly reducing cash interest. In addition, it also allows for new financing, as certain noteholders agreed to provide the Company with USD$14 million in the form of super senior secured bonds (the “Superpriority Notes”), subject to certain conditions established in a restructuring support agreement. Furthermore, the Company’s shareholders and creditors will continue to work together to maximize the value of the company.

It should be noted that the current partners of Inversiones Latin America Power will continue to own 100% of ILAP’s equity once the restructuring is completed. In addition, the parties will enter into a Sales Facilitation Agreement to seek to sell the company before December 31, 2025, which can be extended until June 30, 2026 under certain circumstances.

These measures were taken against the backdrop of the crisis that has affected the energy market in Chile in recent years, as a consequence of the impact of stabilization laws and inefficiencies in transmission planning, among other factors, which has caused a decoupling in the spot market. Therefore, this process seeks to restructure the Company’s assets and liabilities such that it can sustainably meet its contractual obligations with its regulated and non-regulated customers, while continuing to provide clean energy in the country's energy system.

Along these lines, the Company argued that “the serious situation that the energy industry is facing has forced us to take certain measures to give the Company a liquidity structure that honors our contracts, maintains our services, and strengthens the long-term sustainability of our projects in Chile. Due to this, we are making this filing, together with our creditors, in order to maximize our operation’s security, along with supporting the supply of clean energy to Chile's energy grid."

As detailed before, some of the main factors are the consequences of the late implementation of the stabilization laws (PEC and MPC), and inefficiencies in transmission planning. In this context, ILAP argued that in 2016 the Transmission Law was issued, in order to carry out network expansion works necessary for the delivery of long-term electricity supply, which, however, “has not translated into the commissioning of a transmission system with slack, an issue that is identified as the main cause of the levels of price decoupling, resulting in a deterioration of the financial situation of renewable generation companies.”

Finally, ILAP CEO Esteban Moraga stated that “we deeply appreciate the commitment of all our creditors to jointly reach this agreement, with the objective of being able to comply with the obligations of our regulated and unregulated PPAs, which currently supply clean energy directly to citizens and different productive sectors such as transportation, mining, food production and commerce, among others. The Company continues to meet all its obligations to its vendors and service providers both during and after this process, working together to achieve a positive outcome.”

ILAP worked with Lazard Frères & Co. LLC as financial advisor, Greenberg Traurig, LLP as U.S. counsel, Barros Silva Varela & Vigil Abogados Limitada as Chilean counsel, and AlixPartners LLC as restructuring advisor. The noteholders have hired Rothschild & Co. as financial advisor, Cleary Gottlieb Steen & Hamilton as U.S. counsel and Claro & Cía. As Chilean counsel. Citibank is advised by Milbank LLP as U.S. counsel.

This press release speaks as of the date hereof and is based upon information available to the Company, its advisors and the advisors of the Holders, and other conditions or circumstances existing as of the date hereof, all of which are subject to change. Nothing contained in this press release is, or shall be relied upon as, a promise or representation as to the past, present or future. This press release does not constitute an offer to buy or the solicitation of an offer to sell any securities in any jurisdiction in which such offer, solicitation or sale would be unlawful under the securities laws of any such jurisdiction.

About Inversiones Latin America Power

Inversiones Latin America Power is a sustainable energy generation company that owns 99.99% of the entities San Juan S.A. y Norvind S.A., which own and operate the wind projects San Juan y Totoral respectively. Together, both wind farms provide close to 240 MW of clean energy to the National Electric System, which is the equivalent of supplying approximately 260 thousand homes.