Azul Investments expects to settle exchange offers on July 14

Chicago, July 12 – Brazil’s Azul SA and its wholly owned subsidiary Azul Investments LLP announced an expected settlement date of July 14 for its previously announced separate exchange offers for notes due 2024 and 2026, 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 LLP.

At the early deadline, noteholders tendered $291.17 million, or 72.8%, of the existing 2024 notes and $567,602,000, or 94.6%, of the existing 2026 notes.

Early participants will be receiving the total early exchange consideration and unpaid interest in cash to the settlement date.

Participants who participate after the early deadline are receiving the total early exchange consideration, and in the case of the 2026 notes they are not receiving an early exchange premium, but all are also receiving unpaid interest in cash.

The early exchange consideration was an even exchange of existing notes for new notes.

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 early participation deadline was 5 p.m. ET on June 27.

The offer expires at 11:59 p.m. ET on July 12.

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 early tender deadline was also the withdrawal deadline. Tendered notes are now irrevocable.

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

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

There is an eligibility certification form.

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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