GOL Linhas Aéreas Inteligentes (GOL) has filed a Chapter 11 reorganisation plan with the US Bankruptcy Court that delevers its balance sheet and raises new capital as it seeks to exit bankruptcy as a leaner, more efficient airline.
The plan follows the previously announced Plan Support Agreement (PSA) announced on November 6, 2024 between GOL, its largest secured creditor Abra Group, and the committee of unsecured creditors appointed in GOL's Chapter 11 cases.
GOL plans to transform up to $1.7bn of its existing funded debt into equity, while also addressing up to $850 million of other liabilities, possibly by either restructuring, settling or cancelling these debts.
GOL reported a total net debt of R$27.6 billion and a net loss of R$830 million for the nine-month period ended September 30, 2024.
The conversion of debt into equity it is expected to result in significant dilution of GOL's existing equity, confirmed the airline in an official release.
As part of a multi-faceted agreement with GOL and GOL's unsecured creditors committee, Abra has agreed, in satisfaction of the $2.8 billion of debt claims it has asserted, to receive approximately $950 million of new equity and possibly more equity, based upon the resolution of certain unresolved issues as well as $850 million of take-back debt.
Of the Abra take-back debt, $250 million is mandatorily convertible into new equity as set forth in the plan on or after the 30-month anniversary of GOL's emergence from Chapter 11, based on GOL achieving certain valuation metrics.
The airline intends to raise up to $1.85bn of new capital to provide incremental liquidity to support the execution of its growth strategy following exit from bankruptcy. Some $330 million of this amount, the airline says, may be in the form of new equity financing from third-party investors.
Once the plan is approved by the Court, GOL will solicit sufficient votes for confirmation of the plan. GOL says its plan filing positions the airline company to “stay on track for a timely emergence from Chapter 11”.
Milbank is acting as legal counsel for the airline, Seabury Securities as investment banker and restructuring advisor, and AlixPartners as financial advisor. In addition, Lefosse Advogados is serving as GOL's Brazilian counsel.
Abra is working with Wachtell, Lipton, Rosen & Katz as legal counsel and Rothschild & Co as financial advisor. In addition, Pinheiro Guimarães is serving as Abra's Brazilian counsel.
The committee is working with Willkie Farr & Gallagher as legal counsel, Jefferies as the investment banker, Alvarez & Marsal North America as financial advisor and Alton Aviation Consultancy as aviation advisor. Additionally, Stocche, Forbes, Filizzola, Clapis e Cursino de Moura Sociedade de Advogados is serving as the committee's Brazilian counsel.