Four rounds of negotiation between Liberty Latin America (LILA, LILAK) and a steering committee of its largest creditors have yielded rough agreement on the shape of a new debt stack, but the parties remain split on the question that defines this restructuring: how much of the reorganized entity LLA itself retains. The September 11 counterproposal from the creditor group, disclosed in a Regulation FD 8-K filing, sharpens that gap.
The case for a deal being close rests on the financing terms. Both sides have aligned on a $410 million new-money "first-out" facility, with LLA agreeing to cover any prepayment penalties on the existing debt it replaces. The ad hoc group of creditors (AHG) backstops the raise, with participation open to all term loan, bond, and revolving-credit holders. A revolver also appears in both proposals, floating at SOFR plus 400 basis points and carrying no financial maintenance covenant. The $140 million proposed size remains bracketed as open in both parties' submissions. Per a working note in the September 11 term sheet, a 4.0x leverage ceiling against 2026 estimated adjusted OIBDA of $390 million implies total debt of $1,560 million. After the $410 million first-out, that leaves $1,150 million for the second-out takeback, which LLA's September 9 proposal sets at an 8% coupon, a seven-year tenor, and no call protection in a second-lien position.
The equity gap
What the debt terms conceal is how far apart the parties remain on equity. LLA's September 9 position claimed 25% of pro forma equity outright, plus warrants sized so that LLA would own 45% on a fully diluted basis. The steering committee's September 11 response holds the line at 100% of equity going to creditors and offers LLA only cashless warrants covering 5% of the company, struck at an equity value at which existing first-lien creditors would recover 120% of their outstanding claim, par plus accrued interest, before those warrants carry any value.
The counterargument is that the SteerCo has already conceded ground. Its August 30 opening demanded full extinguishment of LLA's equity for no consideration. The offer of 5% warrants represents movement. LLA's operational role under the proposed Transition Services Agreement also gives the company continued standing in these talks. Under that structure, LLA would run shared services for the LPR subsidiary being separated into a standalone "New LPR" entity, absorbing stand-up and transaction costs and bearing indemnification obligations for separation-related liabilities during the transition period.
On balance, the debt architecture looks settled. The line to watch is whether LLA accepts the SteerCo's 5% warrant floor or holds to its 25% equity claim.