Azul SA announces debt exchange offers

Azul S.A. (B3: AZUL4, NYSE: AZUL), a leading airline based in Brazil, has initiated a series of debt exchange offers to further its comprehensive restructuring and recapitalization plan. The offers, announced today, are a continuation of the company's strategy detailed in previous communications on October 28, November 14, and December 9, 2024.

The exchange offers are targeting two sets of existing notes: the 11.930% senior secured first out notes due 2028 (1L Notes) and the senior secured second out notes due 2029 and 2030 (2L Notes), respectively. Eligible holders of the 1L Notes are invited to swap their notes for new 11.930% senior secured first out notes due 2028, while holders of the 2L Notes are offered an exchange for new 11.500% senior secured second out notes due 2029 and 10.875% senior secured second out notes due 2030.

In conjunction with these offers, Azul is soliciting consents to amend the terms of the existing notes, which would remove most restrictive covenants and events of default, and release the collateral securing the notes. As a result, any existing notes remaining after the exchange will become unsecured obligations.

The exchange offers are subject to certain conditions, including minimum participation thresholds and the issuance of up to $500 million in superpriority notes. The early participation deadline is set for January 7, 2025, with the exchange offers expiring on January 15, 2025. Settlement is expected on January 22, 2025.

Furthermore, the terms of the new 2L Notes include a mandatory equitization, where these notes will be exchanged for newly issued preferred shares or exchangeable notes in up to three phases, anticipated to begin no later than April 2025.

The superpriority notes, part of the agreement with a group of supporting bondholders, will be issued on a private placement basis and are crucial for providing liquidity. Azul anticipates receiving $500 million in gross proceeds, with $100 million contingent upon meeting specific conditions.

This strategic move by Azul is based on information provided in a press release statement and is not intended as an offer or solicitation in any jurisdiction where such actions would be unlawful. The issuance and offering of these securities have not been registered under the U.S. Securities Act of 1933 and will not be offered publicly in Brazil.

Azul, recognized by Cirium as the most on-time airline globally in 2022, continues to work with stakeholders to secure additional cash flow improvements and fulfill conditions for the issuance of the superpriority notes and the completion of the exchange offers.

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