#Brazil #São Paulo #Exchange Offers #secured notes #Azul S.A.

Azul S.A. Launches Exchange Offers for Secured Notes

Azul S.A., recognized as Brazil's largest airline, has opened a new chapter in its financial strategy by announcing exchange offers for its outstanding secured notes. Specifically, the airline's wholly-owned subsidiary, Azul Secured Finance LLP, is offering eligible holders a chance to exchange existing 2029 and 2030 senior secured second-out notes for newly issued notes. This move is a significant part of Azul's ongoing efforts to optimize its financial structure and assist its operations amidst evolving market conditions.

Overview of the Exchange Offers

The exchange offers focus on the 11.500% Senior Secured Second Out Notes due 2029 and the 10.875% Senior Secured Second Out Notes due 2030. For holders of these existing notes, they have the opportunity to swap their current securities for newly issued notes of the same maturity but under fresh terms, ensuring greater flexibility and potentially more favorable conditions. The new notes are set to be guaranteed by a consortium of affiliates within the Azul group, providing a level of security for investors.

Eligible holders will have until January 15, 2025, to participate in the exchange, with an early participation deadline set for January 7, 2025. For those who decide to participate early, an additional premium will be offered as an incentive. The issuer has laid out specific exchange considerations, including cash payments tied to previously accrued interests, thus appealing to existing bondholders seeking liquidity alongside the new issuance.

Proposed Amendments to the Existing Indenture

Alongside these exchange offers, Azul is soliciting consent from the holders for proposed amendments to the existing indenture arrangements tied to the notes. These amendments aim to eliminate numerous restrictive covenants that currently govern the existing notes, which may hinder the airline's operational flexibility. By consenting to these amendments, holders will allow Azul to release collateral securing the existing notes, transforming any remaining obligations into unsecured obligations.

This approach represents a common financial maneuver known as a ‘customary exit consent solicitation’, wherein companies negotiate directly with bondholders to alter existing agreements in tandem with new offerings. The goal is clear: to streamline operations while maintaining investor confidence and support.

Strategic Partnerships and Support

Azul has secured backing from a significant group of existing note holders through a Transaction Support Agreement, allowing for collaborative action in the exchange offers. This agreement signals a robust show of confidence from key stakeholders, with promises to tender existing notes in support of the new offers and amendments.

Moreover, the exchange process is structured to ensure compliance with various security laws, providing a streamlined and legal pathway for existing bondholders to transition to the new notes.

Financial Outlook and Market Position

As Brazil's leading airline, Azul operates a substantial network, boasting over 1,000 daily flights and connectivity to more than 160 destinations. With over 180 aircraft in its fleet, the airline has positioned itself as a major player in both regional and international aviation markets. This latest financial strategy aligns with Azul's broader objectives of maintaining strong operational performance amid global economic fluctuations.

The move to issue new secured notes might be crucial in facilitating additional capital and enhancing liquidity as the airline responds to shifting consumer demands and market challenges. Azul's recent recognition as the most punctual airline globally in 2022 adds to its credentials, reinforcing its commitment to reliable service.

Conclusion

Azul S.A.'s exchange offers and related consent solicitations mark a proactive step in reshaping its financial landscape, allowing for potential growth while adapting to changing market dynamics. Existing note holders are encouraged to consider the benefits of participating in the exchange process for an opportunity to maintain their investment while supporting Azul's strategic vision for future operations.

For further details on how to participate in these exchange offers or questions regarding the terms, eligible holders can visit Azul's official channels or reach out to the appointed information agent.