Abra Group has entered into a commitment letter with investment firm Castlelake to raise USD1.3 billion in funds to avoid the risk of default on the holding's bonds due to GOL Linhas Aéreas Inteligentes’s ongoing US Chapter 11 bankruptcy process.
The financing will be used to refinance Abra's senior secured notes in full, the group - which owns shares in GOL, avianca airlines, and Wamos Air - said in an investor notice on August 18.
Bloomberg says Abra Group presented investors with Castlelake’s proposal last week wherein the firm would refinance Abra’s senior secured bonds due in 2028 at a premium on a five-year loan. No official announcement has been made, but Abra’s bondholders are said to be broadly supportive of the deal.
The new debt would have a nominal interest rate, to be paid semi-annually, of up to 14% comprised of cash interest in an amount equal to 6.0% and the remainder in payment-in-kind (PIK). Bloomberg reported that an alternative proposal would have granted the warrant holders a stake in the holding.
GOL declined to comment on the matter.
The Brazilian carrier entered Chapter 11 bankruptcy proceedings in January 2024 and expects to emerge in 2025. Its financial plan includes exit financing of over USD3.5 billion funded via a capital raise and restructuring secured debt obligations over a long-term basis, the issuance of new shares, and the uninterrupted delivery of new B737 MAX jets for the remainder of the decade.
Simultaneously, Abra Group and Azul Linhas Aéreas Brasileiras (AD, São Paulo Viracopos) are negotiating a potential merger with GOL. However, no deal has been reached so far, and Azul is itself trying to improve its financial standing with its creditors.
The ch-aviation fleets module shows that Castlelake has a portfolio of 189 aircraft, of which it leases ten (four B737-8s and six B737-800s) to GOL. The investment firm is also a part of the new owner-consortium of SAS Scandinavian Airlines, alongside Air France-KLM, Lind Invest Aps, and the Danish state. SAS recently completed its Chapter 11 restructuring proceedings.
