Santiago, June 12, 2012

Mr. Fernando Coloma Correa
Superintendent
Superintendence of Securities and Insurances
Av. Libertador Bernardo O´Higgins 1449
Present

Ref.: Communicates ESSENTIAL FACT.

Dear Mr. Superintendent:
As established in Article 9 and in Article 10, part 2, of the Securities Market Law (Ley de Mercado de Valores), and in General Regulation No. 30, (Norma de Carácter General N° 30), duly empowered, I hereby report the following ESSENTIAL FACT regarding LAN Airlines S.A. ("LAN"), Securities Registry No. 306:

1. By means of Essential Fact dated December 21, 2011, it was reported that the shareholders meetings that approved the merger of LAN with Sister Holdco S.A. ("Sister Holdco") and Holdco II S.A. ("Holdco II"), two companies specially incorporated for purposes of the proposed combination between LAN and TAM S.A. ("TAM"), had occurred. If Holdco II successfully completes an exchange offer for the shares of TAM (including those represented by American Depositary Shares - ADSs - of TAM), both Sister Holdco and Holdco II will be merged into LAN (the "Merger"), with LAN continuing as the surviving entity of the Merger. Prior to the Merger, Sister Holdco will hold the shares of TAM contributed by the controlling shareholders of TAM, and Holdco II will hold the shares and ADSs of TAM acquired pursuant to the exchange offer.

2. By means of Essential Fact dated May 10, 2012, it was reported that Holdco II S.A. ("Holdco II") and LAN had commenced in the República Federativa de Brazil ("Brazil") and in the United States of America ("USA") an exchange offer (the "Exchange Offer") for all the outstanding TAM shares (including those represented by TAM ADSs) other than those held by the controlling shareholders of TAM, in exchange for Holdco II shares, and ultimately, for LAN shares (the latter as legal successor of Holdco II due to the effectiveness of the Merger), in the form of Brazilian Depositary Receipts - BDRs - in Brazil, and American Depositary Receipts - ADRs - in the USA.

3. The Exchange Offer was subject to minimum conditions of acceptance for its success and certain other conditions.

4. Prior to the expiration of the Exchange Offer, the acceptances received, together with the shares held by the controlling shareholders of TAM, account for 147,836,864 TAM shares (including those represented by TAM ADSs), which correspond to 94.4% of the TAM shares in circulation, amount which is less than the acceptances required to satisfy the squeeze-out condition. Unless this condition is satisfied, TAM cannot mandatorily redeem all of the TAM shares not offered for acceptance in the Exchange Offer or contributed by the controlling shareholders of TM.

5. In order to proceed with the proposed association between LAN and TAM, on this date the board of directors of LAN has authorized the company to waive, and LAN has waived, the squeeze-out condition. As a result of this waiver, in accordance with Brazilian laws, the period of the Exchange Offer will be extended for 10 calendar days.

6. Therefore, subject to the satisfaction of the other completion conditions set forth in the Exchange Offer documents, the auction that was originally scheduled for today in BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros has been postponed until 9:00 am, Santiago and New York time (10:00 am, Sao Paulo time), of June 22, 2012.

7. Attached you will find the form of extension notice given in Brazil.

Yours sincerely,
Jorge Awad Mehech
Chairman

MATERIAL FACT

Extension of the Period for the Public Offer of Exchange of Shares for Delisting and Resulting Exit from Corporate Governance Level 2 at BM&FBOVESPA relating to TAM S.A. ("Offer")

TAM S.A., LAN Airlines S.A., Holdco II S.A. and Banco Itaú BBA S.A., in its capacity as the Offer intermediary institution, hereby inform the holders of common and preferred shares of TAM that, in view of LAN's waiver of the condition set out in item 4.4.1 of the public notice for the Offer published on May 10, 2012 (the "Public Notice"), the Offer will be extended for a further ten (10) calendar days as from the date this material fact is published; consequently, the auction initially slated to occur on this date through the Bovespa electronic trading system at BM&FBOVESPA is postponed to June 22, 2012, at 10:00 a.m. (São Paulo time), which will henceforth be the Auction Date as per the Public Notice.

On or before noon of the day before the new auction date, this is, June 21, 2012:

(a) the TAM shareholders that have not qualified and are willing to join the initial public offering must enroll at Itaú Corretora or at any other brokerage firm authorized to act in the BOVESPA segment of BM&FBOVESPA, following the same procedures set out in item 5 of the Public Notice; and

(b) the TAM shareholders that have qualified, but are willing to withdraw their selling orders and/or notice of consent to or disagreement with delisting, must give their written order to the brokerage firm in charge of their qualification for the Offer.

On or before 6:00 p.m. (São Paulo time) on June 21, 2012, the last business day immediately before the Auction Date, the brokerage firms representing the Qualified Shareholders must inform BM&FBOVESPA, through the Bovespa electronic trading system under codes TAMM3L (common shares) and TAMM4L (preferred shares), about the number of Shares held by the Qualified Shareholders and which will be represented by such brokerage firms at the Auction, and must also submit a list of the shareholders that have completed the Delisting consent or disagreement options, as per items 5.3.2 and 5.3.3 of the Public Notice.

Below is the Offer schedule, considering the new Auction Date:

Date

Estimated time

Event

13/6/2012

-

Publication of this Material Fact

June 21, 2012
Business Day before the Auction

12:00

Deadline for qualification of new shareholders

18:00

Deadline for registration and cancellation of selling orders and delivery of forms

18:00

Deadline for transfer of the new adhering shareholders’ shares held in custody at the Bookrunner

18:00

Deadline for transfer of the new adhering shareholder’s shares held at the clearinghouse of BM&FBOVESPA

18:00

Notice by the brokerage firms to BM&FBOVESPA about the quantity of Shares held by the Qualified Shareholders, which will be represented by such firms at the Auction

June 22, 2012

8:00

Notice by the Offerors about their adhesion to the US Exchange

9:00

Notice of adhesion to the Offer and to the US Exchange

9:30

Subscriptions

10:00

Auction

June 27, 2012

-

Settlement of the Offer

June 22, 2012 to September 21, 2012

-

Term for disposal of the remaining Shares by interested shareholders, if Delisting is obtained.

The other terms and conditions of the Public Notice remain unchanged.

The Public Notice is available on the following websites:

www.cvm.gov.br, on this page, click at “Participantes do Mercado”, then at “Companhias Abertas”, then at “ITR, DFP, IAN, IPE e outras Informações”, type “TAM S.A.” and/or “LAN Airlines S.A.”, then click at “TAM S.A.” and/or “LAN AIRLINES S.A., click at “OPA - Edital de Oferta Pública de Ações”, and, finally, click at the Public Notice;
www.bmfbovespa.com.br, on this page, click at “empresas listadas”, type “TAM S.A.” and/or “LAN Airlines S.A.”, click at “TAM S.A.” and/or “LAN Airlines S.A.”, click at “Informações Relevantes”, then at “OPA - Edital de Oferta Pública de Ações” and, finally, at the Public Notice;
www.itaubba.com.br/portugues/atividades/prospectos.asp, on this site, click at “Edital OPA Tam S.A”;
www.tam.com.br/ri, on this page, access “Press Release” and then click at the Public Notice; and
http://www.lan.com/upload/pdf/cvm_edital_ir.pdf

 

São Paulo, June 12, 2012.

TAM S.A.

LAN Airlines S.A.

Holdco II S.A.

Banco Itaú BBA S.A.

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