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Aeromexico Plans US Stock Listing After Withdrawing From Mexican Market

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·3 min read
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(Bloomberg) -- Grupo Aeromexico SAB, seeking a more liquid stock market, is planning to delist from the Mexican exchange and trade in New York as soon as this year.

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The airline’s board in June approved a plan to cancel its registration in its home country and launch a voluntary tender offer for outstanding shares. Aeromexico emerged from Chapter 11 in March after filing for bankruptcy protection in the US in 2020. The exit agreement included a clause promising to delist in Mexico to find better markets with more liquidity, according to a filing.

“The plan is to make that first filing before the SEC at the end of the year and then be ready to take advantage of any market opportunity we see,” Chief Financial Officer Ricardo Sanchez Baker said in an interview. “We believe the stock price doesn’t reflect Aeromexico’s fundamentals.”

The move will make Aeromexico the latest Mexican company to exit the nation’s exchange, which last year saw more delistings than offerings. The airline follows dairy producer Grupo Lala SAB, Sempra Energy’s Infraestructura Energetica Nova SAB and Banco Santander SA’s Mexico unit, all of which have delisted or are in the process of doing so.

Trading volume in Mexico’s equity markets is a fraction of that in the US.

After the Chapter 11 restructuring, a group of strategic Mexican shareholders, including Lala Chairman Eduardo Tricio, own 4.1% of Aeromexico. Apollo Global Management, which led the debtor-in-possession financing, retained a stake of about 22%, while Delta Air Lines Inc. held on to 20%.

Read more: Mexico’s stock market is so dead that buyouts are the only action

That left as much as 49% of the stock to be distributed among new investors and creditors. Aeromexico has asked Mexico’s banking regulator for permission to buy up those shares and cancel their registry.

US Requirements

Sanchez Baker said Aeromexico is prepared to meet US disclosure requirements, including environmental, social and governance criteria that are more stringent than those set by Mexico’s market.

“We’re confident we’ll comply with all of them,” he said.

Aeromexico’s plan underscores the doldrums that are weighing on Mexico’s stock market. The funk has been exacerbated by concerns over a slump in investment under President Andres Manuel Lopez Obrador’s government and a feeble domestic retail market for stocks.

Pawn shop operator Tenedora de Acciones CM, known as Globcash, was set to break Mexico’s IPO drought in February with a $58 million listing. The company then said it would delay its debut until late June. A listing still hasn’t occurred.

In December, BlackRock Inc. Mexico country chief Sergio Mendez said the nation needs to overhaul its financial regulations and boost incentives to revive the market. He said he has urged regulators to take steps that would ease listings, such as reducing the amount of information companies need to disclose when they go public.

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