Brazil’s Azul announces final results of exchange offers

Chicago, July 13 – Brazil’s Azul SA and its wholly owned subsidiary Azul Investments LLP announced the expiration and final results of exchange offers and the results for its consent solicitations, according to a press release.

As previously reported, the company was offering to exchange any and all of the $400 million outstanding 5 7/8% senior notes due 2024 (Cusips: 05502FAA6, U0551UAA1) issued by Azul Investments for newly issued 11½% senior secured second-out notes due 2029 to be issued by Azul Secured Finance LLP.

Separately, the company was also offering to exchange any and all of the $600 million outstanding 7¼% senior notes due 2026 (Cusips: 05502FAC2, U0551UAB9) issued by Azul Investments for newly issued 10 7/8% senior secured second-out notes due 2030 to be issued by Azul Secured Finance.

Between the early participation deadline of 5 p.m. ET on June 27 and the final expiration deadline at 11:59 p.m. ET on July 12, an additional $3,045,000 of existing 2024 notes were tendered and an additional $650,000 of existing 2026 notes were tendered.

The additional tenders bring the total of tenders, with the earlier reported amounts, to $294,215,000, or 73.6%, of existing 2024 notes and $568,252,000, or 94.7%, of existing 2026 notes.

Accordingly, the company will issue $294,215,000 of new 2029 notes and $568,219,500 of new 2030 notes.

The early exchange offer was for a one-to-one exchange.

The late exchange consideration was $50 less in new notes for existing notes.

After the early participation deadline, the early consideration was extended for noteholders of the 2024 notes to the end of the offer.

The new notes will be guaranteed by Azul SA and subsidiaries Azul Linhas Aereas Brasileiras SA, IntelAzul SA and ATS Viagens e Turismo Ltda., as well as Azul IP Cayman Holdco Ltd. and Azul IP Cayman Ltd., which will be incorporated prior to the first settlement date.

Solicitation

Simultaneously, Azul Investments was conducting separate consent solicitations for each series of notes to eliminate substantially all of the restrictive covenants, events of default and related provisions in each existing notes’ indentures.

Azul announced it gained the consents by the early deadline.

Tendering noteholders were deemed to have delivered their consents, and noteholders could not deliver consents without tendering their notes.

Other

The offer was amended to remove the prohibition on partial tenders.

When the offer was launched on June 13, Azul entered into a transaction support agreement between Azul Secured Finance, the guarantors and an ad hoc group of existing noteholders in which they agreed to tender their existing notes and deliver consents to the proposed amendments prior to the early participation deadline. The supporting noteholders represent 65.5% of the aggregate principal amount of the existing 2024 notes and 65.8% of the aggregate principal amount of the existing 2026 notes outstanding, which ensured that the threshold would be met to approve the proposed amendments.

The exchange offers and consent solicitations are conditioned on a minimum participation condition of at least 70% of the total principal of outstanding existing notes being tendered in each series. This condition was satisfied by the early deadline.

Other conditions remain. Certain amendments to the indenture governing the convertibles issued by Azul and certain collateral and other documents must be amended or replaced; amendments to the forbearance agreement, the global partial deferral agreement and the related collateral and other documents with Azul Linhas must be replaced; certain waivers must be obtained from creditors; and some other customary conditions must be met.

Details

Settlement will be on July 14, as announced on Wednesday.

The new notes were only eligible for exchange to Rule 144A and Regulation S buyers.

Global Bondholder Services Corp. is the exchange agent and information agent (212 430-3774, 855 654-2014).

Azul is a Sao Paulo, Brazil-based airline.

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