Embraer S.A. Gains Approval for Equity Swap Derivative Contracts

Embraer S.A. Approves Equity Swap Derivative Contracts

On November 6, 2025, Embraer S.A. (B3: EMBR3, NYSE: ERJ) announced that its Board of Directors had approved the execution of derivative agreements, known as "Equity Swap," in collaboration with Banco Itaú Unibanco S.A. This decision was outlined in official minutes released on both the Comissão de Valores Mobiliários (CVM) and the investor relations platforms of the company.

The primary aim of these Equity Swap agreements is to manage the fluctuations in the company’s share prices, especially in light of impending long-term incentive payments. Embraer plans to cap the maximum exposure involved in these contracts at approximately 10,932,998 common shares, adhering to the specific limits set by CVM Resolution No. 77/22.

Key Features of the Equity Swap Agreements

1. Cash Settlement: The agreements are structured to allow cash settlement, ensuring flexibility for the company within a maximum period of 12 months starting from November 7, 2025.

2. Conditions for the Swap: Under the terms of the agreement, Embraer will benefit from the price variations tied to its shares that are traded on the stock market. Additionally, the company will be eligible to receive dividends associated with these shares throughout the duration of the Equity Swap. On the flip side, Embraer will need to pay the Interbank Certificate of Deposit (CDI) rate plus a margin (spread) during the term of the agreements.

3. Purpose of the Equity Swap: This strategic move is aimed at mitigating potential price fluctuations that could impact the company's ability to make future payments under its long-term incentive plans, particularly those related to phantom shares, which are seen as critical for retaining talent and maintaining stability within the organization.

Antonio Carlos Garcia, Embraer’s Executive Vice President for Financial and Investor Relations, underscored the significance of this decision, noting that it reflects the company’s commitment to maintaining shareholder value while responsibly managing its financial instruments.

Implications for Shareholders

For investors, this maneuver suggests a calculated effort by Embraer to reinforce its financial health amidst market volatility. By ensuring that Equity Swaps are in place, the company aims to provide reassurance to shareholders regarding its approach to long-term financial commitments and performance expectations. This strategy is particularly valuable in the aerospace and defense sector, where market conditions can vary significantly.

The announcement of the equity swap has been positively received, indicating that investors appreciate proactive steps toward managing risks tied to share price fluctuations. Overall, such strategies may pave the way for greater confidence in Embraer's stock performance, especially in times of economic uncertainty. As the company advances with this agreement, stakeholders will be closely monitoring developments and the resulting impact on Embraer’s market position.

Looking Ahead

As Embraer implements these derivatives, it is expected to keep the market informed through its investor relations updates, ensuring transparency about the outcomes and any adjustments needed in future strategies. With its innovative approach to capital management, Embraer reinforces its position as a forward-thinking leader in the aerospace industry, paving the way for sustainable growth and stability in shareholder investments.