Brazil's GOL Linhas Aereas Inteligentes and Abra Group - GOL's largest secured creditor and majority investor of GOL - signed a debt-to-equity deal to support GOL's Chapter 11 exit.
The airline had commenced its Chapter 11 proceedings in January this year. As part of the deal, it will reduce GOL's debt by up to around $2.5bn. It said that extinguish up to $1.7bn of its prepetition funded debt and up to $850 million of its other obligations.
“Reaching this agreement is another important step in our efforts to strengthen our financial position and drive GOL's long-term success," said GOL CEO Celso Ferrer.
Abra will receive around $950 million in new GOL equity and possibly more, the company said in a release.
“GOL is slated to emerge from its Chapter 11 process with a dramatically improved liquidity position and a deleveraged balance sheet with a very competitive unit cost and strong network,” said Adrian Neuhauser, CEO of Abra Group. “We also see significant opportunities to build upon our efforts to capitalize on synergies among GOL, Avianca and our other partner airlines.”
“With this agreement, we now have most of the key terms of our restructuring plan in place,” continued Ferrer. “We look forward to arranging the necessary capital commitments to emerge from this process better positioned than ever to execute our long-term strategy.”
GOL also said it anticipates raising up to $1.85bn of new capital through an exit facility to repay its debtor-in-possession (DIP) financing facility and to provide some liquidity towards its forward-moving strategy post-Chapter 11 emergence.