Azul S.A. sets date for lessors equity issuance

Azul S.A. (B3: AZUL4, NYSE: AZUL), a leading Brazilian airline currently valued at $212 million, has announced the closing date for its lessors equity issuance. The transaction is scheduled to finalize on April 3, 2025. According to InvestingPro data, the company faces significant financial challenges with a current ratio of 0.27, indicating short-term obligations exceed liquid assets. This follows the company’s previous announcement on February 4, 2025, detailing a private subscription of new non-voting shares with preemptive rights for current shareholders.

The issuance involves lessors subscribing for 96,009,988 preferred shares, effectively eliminating equity issuance obligations worth approximately $525 million, or R$3.1 billion at the agreed exchange rate. The subscription period for any remaining unsubscribed shares began on March 25, 2025, and will conclude on March 31, 2025.

Lessors participating in the equity issuance have agreed to lock-up restrictions on the newly acquired non-voting shares, with a staggered release schedule starting from July 3, 2025, and ending on July 3, 2026.

Furthermore, Azul is taking steps to address its debt by mandatorily exchanging $274.6 million of its second out secured bonds for preferred shares at R$3.58 each by April 30, 2025. This restructuring is crucial given the company’s total debt of $6.07 billion and concerning debt-to-capital ratio of 97%. For deeper insights into Azul’s financial health and additional metrics, InvestingPro subscribers can access the comprehensive Pro Research Report, featuring expert analysis and actionable intelligence. These shares will be freely tradable, although the company is considering negotiating lock-up agreements with certain bondholders.

Azul remains committed to keeping shareholders and the market informed of any developments related to these financial maneuvers through its official communication channels.

This news is based on a press release statement and does not constitute an offer to sell or a solicitation of an offer to buy any securities. The potential offering will not be registered under the U.S. Securities Act of 1933, as amended, and will be subject to applicable laws and regulations.

Azul is recognized for its extensive flight network within Brazil and has recently been acknowledged for its punctuality. Despite operational achievements, InvestingPro analysis indicates the stock is currently undervalued, with revenue growing at 5.24% over the last twelve months to $3.16 billion. The airline continues to receive accolades for its service, including the best airline in the world by TripAdvisor (NASDAQ:TRIP) Travelers (NYSE:TRV)’ Choice in 2020.

In other recent news, Azul S.A. has announced a significant capital increase as part of its restructuring strategy, with plans to issue new common and preferred shares to raise between BRL 72 million and BRL 3.37 billion. This initiative, pending shareholder approval at the upcoming Extraordinary General Meeting, is aimed at strengthening the airline’s capital structure and liquidity. In a related development, Azul’s Board of Directors has approved a private issuance of new preferred shares, potentially raising between BRL 1.51 billion and BRL 6.13 billion.

Additionally, Azul is considering a primary public offering of preferred shares targeted at professional investors, though details are still under discussion. Meanwhile, Raymond (NSE:RYMD) James has adjusted its price target for Azul to $5.00, down from $6.00, but continues to rate the airline as Outperform, citing a cautious yet positive outlook on its financial restructuring. Conversely, S&P Global Ratings has downgraded Azul’s credit rating to ’SD’ (selective default) following a distressed debt exchange, though it plans to reassess the ratings soon. These recent developments are pivotal in Azul’s ongoing efforts to improve its financial health and operational performance.

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