São Paulo, March 22, 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$300,000,000 aggregate principal amount of Exchangeable Senior Notes due 2024 (the "notes") guaranteed by GLAI and GOL Linhas Aéreas S.A., pursuant to exemptions from registration under the Securities Act of 1933, as amended (the "Securities Act"). The Issuer has also granted the initial purchasers of the notes an option to purchase up to an additional US$45,000,000 aggregate principal amount of notes. The notes will be issued in minimum denominations of US$100,000 and integral multiples of US$1,000 in excess thereof.
The 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 July 15, 2019.
Holders may exchange notes into American Depositary Shares ("ADSs") (each representing two preferred shares of GLAI) at their option under certain circumstances and during certain periods. The initial exchange rate of the notes is 49.3827 ADSs per US$1,000 principal amount of notes (which is equivalent to an initial exchange price of approximately US$20.25 per ADS and represents an exchange premium of approximately 35% above the public offering price of the initial ADSs sold in the concurrent offering of ADSs described below, which was US$15.00 per ADS). The exchange rate for the notes is subject to adjustment upon the occurrence of certain events. The Issuer may settle exchanges of notes in cash, ADSs or a combination of cash and ADSs, at its option.
In connection with the pricing of the notes, the Issuer entered into certain privately negotiated capped call transactions with certain of the initial purchasers of the 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. The cap price of the capped call transactions will initially be approximately US$27.75 per ADS (which represents a premium of approximately 85% above the public offering price of the initial ADSs sold in the concurrent offering of ADSs described below), and is subject to certain adjustments under the terms of the capped call transactions. If the initial purchasers of the notes exercise their option to purchase additional notes, the Issuer may enter into additional capped call transactions with the Counterparties.
The Issuer will use the proceeds to purchase certain warrants of GLAI, as described below, 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.
At the closing of the 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.
Concurrently with this notes offering, our controlling shareholders have agreed to offer up to 14,000,000 ADSs in a separate SEC-registered offering. Such ADSs will be loaned by our controlling shareholders pursuant to an ADS lending agreement with one of the initial purchasers of the notes or its affiliate (the "ADS borrower"). The ADS borrower has informed GLAI that it or one of its affiliates intends to sell the borrowed ADSs and use the resulting short position to facilitate privately negotiated derivatives transactions related to the notes. An initial tranche of approximately 5,200,000 ADSs will be sold at a price of $15.00 per ADS concurrently with the notes offering, and additional ADSs will be sold in transactions, including block sales, in the over-the-counter market, in negotiated transactions or otherwise, during a period of 85 trading days following the pricing of the notes offering, at prevailing market prices at the time of sale or at negotiated prices, up to the total limit of 14,000,000 ADSs. The Issuer, GLAI and our controlling shareholders will not receive any proceeds from these transactions.
The 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 on or prior to the 180th day after the closing of the offering.
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 any observation period related to an exchange of the notes, it could affect the amount and value of the consideration that noteholders will receive upon exchange of such notes.