São Paulo, July 17, 2019 - GOL Linhas Aéreas Inteligentes S.A. (NYSE: GOL and B3: GOLL4) ("GLAI"), Brazil's #1 airline, hereby announces to the market, in compliance with Article 156, paragraph 4, of Law No. 6.404/76 and CVM Rule No. 358, of January 3, 2002, that GOL Equity Finance, an orphan special purpose vehicle organized under the laws of the Grand Duchy of Luxembourg (the "Issuer"), has priced an offering of US$80,000,000 in aggregate principal amount of 3.75% Exchangeable Senior Notes due 2024 (the "additional notes"), as a further issuance of and to be consolidated and form a single fungible series with the Issuer's US$345,000,000 in aggregate principal amount of 3.75% Exchangeable Senior Notes due 2024 initially issued on March 26, 2019 and April 17, 2019, respectively (the "initial notes" and, together with the additional notes, the "notes"). The additional notes, guaranteed by GLAI and GOL Linhas Aéreas S.A., are being offered pursuant to exemptions from registration under the Securities Act of 1933, as amended (the "Securities Act"), in minimum denominations of US$100,000 and integral multiples of US$1,000 in excess thereof.
Holders may exchange notes into American Depositary Shares ("ADSs") (each representing two preferred shares of GLAI) at their option under certain circumstances. The Issuer may settle exchanges of notes in cash, ADSs or a combination of cash and ADSs, at its option.
The reopening was priced at a yield of -0.23%. The additional notes will bear interest at a rate of 3.75% per year, payable semi-annually in arrears on January 15 and July 15 of each year, beginning on January 15, 2020. Purchasers of the additional notes will be required to pay accrued interest from and including July 15, 2019 up to but excluding the date the additional notes are delivered.
In connection with the pricing of the additional notes, the Issuer expects to enter into certain privately negotiated capped call transactions with certain of the initial purchasers of the additional notes and/or other financial institutions (the "Counterparties"), which are expected generally to reduce the potential dilution to GLAI's preferred shares and the ADSs upon any exchange of notes and/or offset any cash payments the Issuer is required to make in excess of the principal amount of exchanged notes, as the case may be, with such reduction or offset, subject to a cap based on the cap price.
At the closing of the additional notes offering, GLAI will approve the issuance of warrants as part of a preemptive rights offering to existing shareholders (but not holders of ADSs or holders of preferred shares of GLAI that are U.S. persons) in accordance with Brazilian law.
The Issuer will use the proceeds from this additional notes offering to purchase certain warrants of GLAI and to pay the cost of the capped call transactions, described above, and will lend the remainder of the funds to GLAI and its affiliates for general corporate purposes.
The additional notes have not been and will not be registered under the Securities Act, and they will only be offered or sold (1) in the United States to qualified institutional buyers in reliance on Rule 144A under the Securities Act that are not affiliates of GLAI and that are also qualified purchasers (as defined in Section 2(a)(51) of the U.S. Investment Company Act of 1940) and (2) outside the United States to certain non-U.S. persons that are not affiliates of GLAI in offshore transactions in accordance with Regulation S under the Securities Act. The ADSs deliverable upon exchange of the notes have not been registered under the Securities Act and, unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. The resale of any ADSs deliverable upon exchange of the notes is expected to be registered on a shelf registration statement that will be filed with the U.S. Securities and Exchange Commission on or prior to the 120th day after March 26, 2019.
In connection with establishing their initial hedge of the capped call transactions, the Counterparties and/or their respective affiliates expect to enter into various derivative transactions with respect to the ADSs and/or purchase ADSs concurrently with, or shortly after, the pricing of the notes. This activity could increase (or reduce the size of any decrease in) the market price of the ADSs or the notes concurrently with, or shortly after, the pricing of the notes. In addition, the Counterparties and/or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to the ADSs and/or purchasing or selling ADSs in secondary market transactions following the pricing of the notes and prior to the maturity of the notes. This activity could affect the market price of the ADSs or the notes, which could affect noteholders' ability to exchange the notes and, to the extent the activity occurs during an observation period related to an exchange of notes, it could affect the amount and value of the consideration that noteholders will receive upon exchange of such notes.