Latam Airlines Falls in Chile After Confirming Share Sale

Latam Airlines SA, Latin America’s largest carrier, dropped the most since August after its chairman said the company plans to sell new shares as part of an effort to recover the investment grade it lost last year.

Latam retreated 2.6 percent to 9,800 pesos at 1:31 p.m. in Santiago, its biggest drop on a closing basis since Aug. 7. The Ipsa benchmark index fell 0.5 percent.

The airline, formed by Lan Airlines SA’s $3.3 billion takeover of Tam SA, will sell new shares to improve its debt ratios and return to investment grade, Chairman Mauricio Amaro told reporters today in Santiago after its annual general shareholder meeting.

“Investment-grade is something that we will seek to return to, if not in the short term, certainly in the medium term,” Amaro said. “We are evaluating a capital increase at the moment.” Amaro wouldn’t comment on a specific date for the share sale or how much it plans to raise.

Latam’s credit rating was lowered to BB+, or one level below investment grade, by Fitch Ratings in June 2012. Fitch said that an increase in the rating would require a reduction in debt ratios.

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