April 15, 2008
We refer to the rule changes proposed by the U.S. Securities and Exchange Commission (“SEC”) to Foreign Issuer Reporting Requirements.
We have analyzed each of such proposals and have no comments to the same other than to the proposal regarding the acceleration of the reporting deadline for Form 20-F Annual Reports. Pursuant to the proposal, we would be required, as large accelerated filers, to file annual reports on Form 20-F within 90 days after our fiscal year-end.
As you are aware, our fiscal year ends every December 31. In the quarter following that date Chilean companies must comply with all the reporting requirements in the Chilean market, which include at least preparation and filing of (i) audited financial statements in local GAAP and (ii) an Annual Report that meets the requirements of the Chilean regulator (Superintendencia de Valores y Seguros). It is important to note that the Chilean Annual Report differs significantly from the requirements of Form 20F. Most Chilean issuers focus on the preparation of Form 20F only after having complied with the domestic market requirements, since the preparation of Form 20F requires significant and detailed additional information as well as (until at least 2009) the preparation of two sets of audited financial statements: one in Chilean GAAP and the other with a reconciliation to US GAAP.
In our experience, the preparation of our annual report on Form 20-F is a lengthy process that takes at least two to three months. The extent and detail of the information necessary for Form 20F is based on widespread company involvement, and detailed information and coordination from various areas within the company. In addition, it entails an extensive revision process at different levels within the organization, especially in light of the Officer Certifications required pursuant to Sarbanes Oxley regulations. In addition, the document must be circulated and revised thoroughly by external legal counsel in the USA as well as by external auditors, a process which in itself takes a lot of time, especially considering the length and detail of the document. Should the SEC proposal be approved, our company (and all the other Chilean FIP companies) would be in the novel situation of having to meet all local requirements and the Form 20-F during a single quarter, which as an additional consideration is also summer season and holiday weeks for most companies in Chile.
We are convinced that putting Chilean companies in the situation described above will significantly increase the costs for FPI of listing in the United States, which are already significantly higher relative to other capital markets alternatives. Therefore, we respectfully dissent from the subject proposal and pledge that the current reporting deadline for Form 20-F Annual Reports is maintained.
LAN Airlines S.A.