São Paulo, December 9, 2019 – GOL Linhas Aéreas Inteligentes S.A. (“GOL” or “Company”), (NYSE: GOL and B3: GOLL4), Brazil’s #1 domestic airline, hereby informs that, on the date hereof, jointly with Gol Linhas Aéreas S.A. (“GLA”), it sent a letter (“Letter”) to Smiles Fidelidade S.A. (B3: SMLS3) (“SMILES” and, jointly with GOL and GLA, the “Group”) communicating its proposal for a corporate reorganization of the Group, to be submitted to SMILES’s minority shareholders, as detailed below (“Reorganization”).
The Reorganization will be subject to approval of its terms and conditions by the majority of the holders of outstanding shares of SMILES. Therefore, (i) the Reorganization’s terms and conditions, as set out in the Letter and described below, will not be subject to negotiation with SMILES’s management and (ii) an independent special committee of SMILES will not be established, as provided in CVM Opinion (Parecer de Orientação) No. 35/2008. GOL also informs that it does not intend to migrate its shares to the Novo Mercado listing segment of the B3 S.A. – Brasil, Bolsa, Balcão, on which SMILES common shares trade, and, therefore, the Reorganization will also be subject to approval by SMILES’s minority shareholders as provided in the sole paragraph of article 46 of the Novo Mercado’s Regulation.
The Reorganization, once implemented, will result in the migration of SMILES’s shareholder base to GOL. In accordance with the Reorganization’s proposed terms, each common share of SMILES will be entitled, at the end of the Reorganization, to: (a) 0.6319 preferred shares of GOL (“GOL Preferred Shares”) and R$16.54 (based on the redemption amount of redeemable preferred shares, as described below) (“Base Swap Ratio”); or, alternatively, (b) 0.4213 GOL Preferred Shares and R$24.80 (based on the redemption amount of redeemable preferred shares), at the discretion of SMILES’s shareholders which, in that case, shall exercise the option described in item 3 below (“Optional Swap Ratio”).
The Base Swap Ratio permits SMILES shareholders that believe GOL’s intrinsic value to be above its current market price to receive more GOL Preferred Shares and thereby participate in a greater proportion in the value created by, and the synergies resulting from, the Reorganization. SMILES shareholders that prefer to allocate their investments in other assets can instead receive more GLA Redeemable Preferred Shares.
In determining the proposed swap ratio, GOL and GLA took into consideration the value of R$39.25 per GOL Preferred Share and R$41.34 per SMILES common share.
The amounts described above will be proportionately adjusted by any stock splits, reverse stock splits, stock dividends, dividends, interest on shareholders’ equity or capital decreases of the Group. Beginning on the date hereof, any dividends, interest on shareholders’ equity or capital decreases to be distributed to SMILES shareholders will be proportionately deducted from the amount of GLA Redeemable Preferred Shares to be granted to SMILES shareholders as a result of the merger of SMILES common shares by GLA. In addition, Brazilian income tax (imposto sobre a renda retido na fonte) on capital gains will be withheld, as applicable, and deducted from the amount of GLA Redeemable Preferred Shares.
The Reorganization includes the following steps, which will be implemented simultaneously and interdependently:
(i)
merger of SMILES common shares by GLA, with GLA’s issuance of common shares (“GLA Common Shares”) and redeemable preferred shares (“GLA Redeemable Preferred Shares”) to SMILES shareholders, as described below (“Merger of SMILES Shares”);
(ii)
merger of GLA shares by GOL, with GOL’s issuance of GOL Preferred Shares and redeemable preferred shares (“GOL Redeemable Preferred Shares”) to GLA shareholders, as described below (“Merger of GLA Shares”); and
(iii)
redemption of GLA Redeemable Preferred Shares and GOL Redeemable Preferred Shares, with payment in cash based on the redemption of GOL Redeemable Preferred Shares to SMILES shareholders to be made on the settlement date of the Reorganization.