Azul is in the market with an offering to exchange existing senior notes for new senior secured notes. Issued via subsidiary, Azul Investments, the offer proposes exchanging the 5.875% senior notes due 2024 for 11.500% senior secured second out notes due 2029, and exchanging the 7.250% senior notes due 2026 for 10.875% senior second out notes due 2030.
The exchange offer is only made to existing note holders. Azul has already entered into a Transaction Support Agreement (TSA) with a group of supporting existing noteholders that represent 65% of the holders of the 2024 notes and 65.8% of the 2026 notes.
This exchange agreement is part of the airline's restructuring plan to optimise its debt amortisation profile and capital structure.
The new notes, issued by Azul Secured Finance - the newly-formed Delaware limited liability partnership fully owned by Azul - are guaranteed by a shared collateral package that includes receivables generated by the TudoAzul program, Azul Linhas’ loyalty program, and the Azul Viagens travel package business. The receivables and Azul's Intellectual Property will owned by new subsidiaries - Azul IP Cayman Holdco Ltd. and Azul IP Cayman Ltd., to be incorporated prior to closing of the exchange offer.