The carrier has made a filing with the Brazilian Securities Commission for the issuance under Brazilian law of R$1.6 billion (US$ 284.8 million) in debentures which can be converted into preferred shares in the company.
On Monday (October 26, 2020), Azul S.A. announced that they have filed with the Brazilian Securities Commission (Comissão de Valores Mobiliários) to launch a public offering of approximately R$1.6 billion (US$284.8 million) in aggregate convertible debentures. The debentures will be governed by Brazilian law and convertible into preferred shares in Azul and may be increased by up to 20 percent. The company will use the proceeds for working capital purposes, to expand their logistics business and for other strategic opportunities.
Knighthead Capital Management, LLC and Certares Management LLC, solely or on behalf of certain affiliates (Anchor Investors) intend to submit an order for approximately R$1.6 billion to R$1.8 billion of the debentures at an initial conversion premium bid of 27.5 percent over the 30 day VWAP (Volume Weighted Average Price). The Anchor Investors will not participate in the bookbuilding process but have committed to submitting an order in the additional amount of R$560 million (US$ 99.568 million) in convertible debentures if Azul carries out a new public offer on similar terms over the next 12 months.
The debentures are denominated in Brazilian Reals, mature in five years, are indexed to the U.S. dollar and pay an ‘in-kind’ interest rate of 7.5 percent in the first year through a par value increase. Thereafter, they will pay an annual interest rate of 6 percent in cash and the debentures will be convertible at an initial premium determined during the bookbuilding process. Additionally, the notes will be redeemable at Azul’s discretion for cash at any time after 36 months, but only id the reported price per American depositary share (representing Azul’s preferred shares) exceeds 130 percent of the conversion price for a pre-determined time period.
Azul is the largest airline in Brazil, based on the number of departures and cities served. Prior to the global COVID-19 pandemic, the carrier offered 916 daily departures to 116 destinations and operated a fleet of 142 aircraft. The airline employs more than 13,000 and has a network of 249 nonstop routes (as of December 31, 2019).
Source: Azul