By Gabriel Araujo
SAO PAULO (Reuters) – Brazilian airline Azul on Tuesday launched exchange offers aimed at pushing forward bonds originally set to mature in 2024 and 2026, the latest move in a broader restructuring plan it expects to remove an overhang on its stock.
The exchange offers total $1 billion and follow a deal with aircraft lessors to give them equity and tradeable debt in exchange for lower payments, a deal seen reducing lease payments by a total 5.4 billion reais ($1.11 billion) in the long term.
Azul said in a securities filing it would look to exchange 5.875% notes due 2024 and totaling $400 million for newly issued 11.5% notes due 2029, while $600 million in 7.25% notes maturing in 2026 would be exchanged by 10.875% notes due 2030.
“Markets were looking a lot at Azul’s short term debt, and we are going to get it all out of our way,” Azul CEO John Rodgerson told Reuters in light of the announcement. “That’s going to give a lot of track for Azul to really take off now.”
Rodgerson acknowledged the interest paid on the new notes would be higher because of the “complex” global scenario of high rates, but assured the move would be beneficial for both the company and bondholders, with 100% of the notes set to be paid.
A group accounting for 65.5% of the 2024 notes and 65.8% of the 2026 bonds already agreed with the exchange offer, Azul added.
“We are structuring all of this to solve all the short-term problems we had,” Rodgerson said, noting the company believes those issues had been an overhang on its shares and debt until now.
Brazil-traded shares in Azul are up roughly 75% so far this year, having closed at 19.21 reais each on Monday, but remain far below their pre-pandemic highs, when they traded above the 60-real mark.
Analysts at Bank of America recently upgraded their recommendation on Azul to “Neutral” from “Underperform”, citing foreign exchange and oil price tailwinds as well as its restructuring plan.
($1 = 4.8581 reais)
(Reporting by Gabriel Araujo; Editing by Steven Grattan and Conor Humphries)
