São Paulo, March 3, 2023 - GOL Linhas Aéreas Inteligentes S.A. (NYSE: GOL and B3: GOLL4) (“GOL”), Brazil’s largest domestic airline, informs its investors and the market in general that Abra Group Limited (“Abra”), a new holding company established to control the operations of GOL and Avianca Group International Limited (“Avianca”) has closed its private placement with the Abra investors and concurrently GOL has closed the private investment by Abra into GOL through senior secured notes (“GOL SSNs due 2028”) which Abra can request to be replaced by exchangeable senior secured notes (“GOL ESSNs due 2028”). The GOL SSNs due 2028 are secured by the intellectual property and brand of Smiles, GOL’s market leading loyalty program and also a pari passu lien on the intellectual property, brand and spare parts of GOL. A portion of the investment in Abra comes from members of an Ad-Hoc Group of secured and unsecured bondholders of GOL (the “Ad-Hoc Group”), who entered into a support agreement (the “Support Agreement” or “SA”) on February 7, 2023, and a portion of the investment comes from additional bondholders of GOL outside the Ad-Hoc Group (the “Non AHC Group”), who signed joinder agreements to the Support Agreement.
GOL Financing Final Terms
| · | Abra has signed definitive documentation to (i) invest, subject to certain conditions and approvals, up to $451 million of cash, (ii) contribute $1,077 million face value of GOL bonds at a $312.6 million discount to par, and (iii) receive as consideration the GOL SSNs due 2028 |
| · | The $1,077 million face value of GOL bonds will be canceled post-closing |
| · | The terms of the GOL SSNs due 2028 to be issued to Abra include: |
| o | Aggregate principal amount: up to $1.4 billion |
| o | Interest Rate: 18% of which 4.5% will be cash pay and 13.5% paid-in-kind |
| o | Prepayment: Non-call life except that the GOL SSNs due 2028 can be repaid through the issuance of the GOL ESSNs due 2028 |
| o | Security Interest: (i) a first-lien on the Smiles brand, intellectual property, customer lists, trademarks, the primary platform infrastructure related contracts and other agreements (the “Smiles IP Collateral”) including by way of a fiduciary assignment and by transfer of certain assets to a wholly owned subsidiary the equity of which is pledged to secure the GOL SSNs due 2028 and the GOL ESSNs due 2028, (ii) a first lien pledge of all intercompany loans to GOL from its subsidiaries and affiliates and (iii) a pari passu lien on the intellectual property, brand and spare parts securing the GOL 8.0% SSNs due 2026 (“GOL SSNs due 2026”) (the “GOL Collateral”) |
| o | IPCo: GOL will transfer the available Smiles IP Collateral to a wholly owned Brazilian subsidiary (the “IPCo”) by July 10, 2023, with the remaining available Smiles IP Collateral to be transferred to IPCo by December 31, 2023 and GOL will enter into contractual undertakings with Abra and IPCo requiring that Smiles be GOL’s sole and exclusive loyalty program |
| | o | Covenants: other protective covenants for a security of this nature in line with existing GOL debt covenants |
| · | Subject to certain conditions and approvals, Abra can request the exchange of the GOL SSNs due 2028 for the GOL ESSNs due 2028. The terms of the GOL ESSN due 2028 include: |
| o | Aggregate Principal Amount: same as the GOL SSNs due 2028 |
| o | Interest Rate: 18% of which 4.5% will be cash pay and 13.5% paid-in-kind |
| o | Conversion Premium: 35% which upon satisfaction of certain conditions can be reduced to 15% |
| o | Security Interest: a first lien on the same collateral that secures the GOL SSNs due 2028 |
| o | Early Maturity: springing maturity in 2024 or 2025 prior to the maturity dates of the GOL 3.75% SENs due 2024 (“GOL SENs due 2024”), GOL 7.0% SUNs due 2025 (“GOL SUNs due 2025”) due 2025 and GOL SSNs due 2026, respectively, in each case, if more than 10% of such bonds remain outstanding. |
| o | Covenants: the same protective covenants as the GOL SSNs due 2028 |
Support Agreement Outcome
| · | Certain shareholders of Abra have invested $172.5 million in cash, the Ad-Hoc Group has invested $329.9 million in cash and the Non AHC Group has invested $49.5 million in cash to support the transaction representing an aggregate cash investment of $551.9 million. |
| · | The Ad-Hoc Group and the Non AHC Group have delivered $1,077 million face value of GOL bonds to Abra at an average price of 71 cents. |
| · | The GOL bonds delivered by members of the Ad-Hoc Group and the Non AHC Group represent 83% of the GOL SENs due 2024, 47% of the GOL SUNs due 2025, 61% of the GOL SSNs due 2026 and 10% of the GOL Perpetual Notes. |
| · | The amounts fully satisfied the conditions precedent associated with the minimum cash requirement and the minimum bonds delivered requirement as contemplated under the Support Agreement, and meet the thresholds required for the exit consents to eliminate certain covenants and modify the 2026 indenture, in respect thereof, to close the transaction. |
| · | In addition, the invested amounts conform to the aggregate principal amount caps contained in the Support Agreement, as amended. |
The transaction between Abra and GOL represents one of the largest completed liability management and comprehensive refinancing transactions in both the airline industry and the emerging markets. This transaction also represents the tenth liability management or capital raising transaction that GOL has completed since the onset of the COVID-19 pandemic, and GOL thanks all its stakeholders for their support over the last three years.
Abra was advised by Bank of America Securities, Evercore and Milbank, GOL was advised by Lefosse and the Ad-Hoc Group was advised by Rothschild & Co., Dechert and Padis Mattar.
