Azul S.A. announces primary public offering of shares

Azul S.A. (B3: AZUL4; NYSE: AZUL), a Brazil-based airline with annual revenues of $3.16 billion, has officially filed a request with the Brazilian Securities Commission for a primary public offering of preferred shares. The announcement comes as the company’s stock trades near its 52-week low of $1.37, according to InvestingPro data. The announcement was made public today, following a series of disclosures leading up to the Board of Director’s approval.

The offering consists of up to 450,572,669 preferred shares and may be increased by an additional 155%, totaling up to 697,916,157 shares. Each share subscribed in the offering will be accompanied by a warrant as an added benefit to subscribers. The offering is targeted exclusively at professional investors and will include international placement efforts. This capital raise comes as InvestingPro analysis shows the company’s current market capitalization at $177.94 million, with the stock down over 77% in the past year.

The shares and warrants are expected to begin trading on the São Paulo Stock Exchange (B3 S.A. – Brasil, Bolsa, Balcão) two business days after the commencement announcement, with settlement expected to occur one business day later.

Existing Azul shareholders will have a priority offering right in Brazil, allowing them to reserve their pro rata share of the offering. However, current holders of American Depositary Receipts are excluded from this priority offering. The shares offered will not be registered under the U.S. Securities Act of 1933, indicating that they cannot be offered or sold in the United States except under specific exemptions.

Azul is also exploring the possibility of entering into debt instruments backed by certain credit and debit card receivables, which could amount to approximately R$900 million. This debt would be used for working capital financing and is expected to have a one-year maturity, with prepayment options available if government-backed financing is obtained. According to InvestingPro data, the company currently carries $6.07 billion in total debt, with a concerning current ratio of 0.27, indicating potential liquidity challenges.

The company emphasizes that the information shared in this material fact notice is for informational purposes only and does not constitute an investment recommendation or an offer to sell securities.

Azul S.A. has committed to keeping shareholders and the market updated on the progress of the offering through its usual communication channels. The details provided are based on a press release statement.

In other recent news, Azul S.A. has announced a significant capital increase as part of its ongoing restructuring efforts, pending shareholder approval at an Extraordinary General Meeting. The company aims to raise between BRL 1.51 billion and BRL 6.13 billion through the issuance of new preferred shares, with a minimum of 47 million shares offered at BRL 32.09 each. This capital boost is intended to enhance Azul’s financial health and liquidity, following negotiations with lessors and equipment suppliers to improve cash flow by over USD 300 million between 2025 and 2027. Additionally, Azul has set the closing date for its lessors equity issuance to April 3, 2025, involving the subscription of 96,009,988 preferred shares to eliminate obligations worth approximately $525 million.

In further developments, Azul is contemplating a primary public offering of preferred shares exclusively for professional investors as part of its recapitalization efforts. Meanwhile, Raymond (NSE:RYMD) James has adjusted its price target for Azul to $5.00 from $6.00, maintaining an Outperform rating. The firm cites Azul’s progress in capital restructuring but notes potential delays in achieving the 2025 EBITDA target of R$7.4 billion due to currency fluctuations. Azul continues to keep shareholders informed through its official channels, emphasizing its commitment to transparency during these restructuring processes.

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