Abra Group has agreed to invest USD400 million in cash and USD680 million (at face value) in bonds acquired from existing bondholders into GOL Linhas Aéreas Inteligentes (G3, São Paulo Congonhas) in return for at least USD1 billion worth of senior secured notes, the Brazilian airline said in a stock market filing.
The senior secured notes will be issued for a term of up to 5 years and will bear 18% interest, which will be partially paid in cash and partially in kind. The notes will be secured against the brand, customer base, and trademarks of Smiles, GOL's loyalty programme, and the airline's own brand, intellectual property, and pool of spare parts. The loyalty programme's assets have been appraised at USD3.7 billion, while the airline's assets - at USD1.5 billion.
The senior secured notes will be refinanced by exchangeable senior secured notes due in 2028.
"The GOL senior secure notes due 2028 may be exchanged into the GOL exchangeable senior secured notes due 2028 after GOL's preferred shareholders have the opportunity to exercise preemptive rights in connection with the issuance of the relevant warrants and all necessary corporate approvals have been obtained," the airline said.
Abra Group will invest the USD400 million in cash in stages through 2028. The bonds will be pledged by the existing bondholders to Abra to support the transaction and acquired by the holding at discount prices. By selling the bonds due before 2028 to Abra, the bondholders have effectively agreed to delay their maturity.
In addition, "certain Abra shareholders" have agreed to invest USD418 million into the holding to support the transaction.
The transaction will be exercised upon the completion of the establishment of Abra Group as the new parent company for GOL and avianca airlines (AV, Bogotá).
