08/10/2024 – 15:32
SÃO PAULO (Reuters) – Azul airline wants to raise capital, after reaching an agreement with lessors to settle around 3 billion reais in obligations, alleviating market concerns about its debt load, said the company’s executive president, John Rodgerson, told Reuters this Tuesday.
“We had to solve this problem first, which is already solved, and now we can raise capital,” Rodgerson said in an interview. “Now we can look forward and never look back.”
Azul now wants to raise around US$400 million, said the executive, with the possibility of using Azul Cargo to raise convertible debt on the market.
The company, which dominates the Brazilian aviation industry along with Latam and Gol, is also awaiting the release of funds from a government-approved credit line to support local airlines.
“As we said, we were going to use our company Azul Cargo to raise a debt, perhaps a convertible debt on the market, to strengthen us now, knowing that the money will not go to the ‘lessor’”, said Rodgerson.
The executive highlighted that the company is in “friendly” conversations with bondholders, but that there are “several people” willing to lend money to Azul, expanding the airline’s options while the company analyzes “various types of debt” for a possible transaction.
“REMOVES SHORT-TERM PRESSURE”
Azul announced on Monday night an agreement with aircraft lessors and equipment manufacturers that involves the exchange of around 3 billion reais in debt obligations for the issuance of new company shares.
The agreement involved 92% “of the existing share issuance obligations”, stated Azul in a relevant fact, which will be exchanged for the single issuance of up to 100 million new preferred shares of the company.
Azul’s shares closed on Monday at 5.75 reais, which implies that the issuance of shares under the agreement, if carried out the day before, would represent a value of 575 million reais. This Tuesday, the company’s shares jumped around 13%, close to 6.5 reais each.
The new agreement with creditors, if concluded, will replace an agreement reached by Azul last year which provided that the 3 billion reais would be paid quarterly through the issuance of shares at a price of 36 reais per share from the third quarter of this year. year until the end of 2027. At the time of this agreement, Azul’s share was worth around 15 reais.
“These agreements represent a significant part of a comprehensive plan designed to strengthen Azul’s cash generation and improve its capital structure in the future,” stated the company in the material fact.
The airline also stated that it continues to negotiate with the holders of the remaining 8% of the share issuance obligations.
Analysts at JPMorgan stated that the issuance of 100 million shares represents a dilution of around 23% to the company’s shareholders, based on Monday’s share price.
“The announcement came almost in line with expectations about a potential dilution of 20% to 25%,” said Guilherme Mendes, an analyst at JPMorgan in a report. “We welcome the announcement, as it removes short-term pressures on the company’s potential bankruptcy filing,” added Mendes, citing that JPMorgan continues with a “neutral” recommendation for Azul’s stock.
(Reporting by Alberto Alerigi Jr., with additional reporting by Gabriel Araujo)
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