GOL Linhas Aéreas Inteligentes (G3, São Paulo Congonhas) and its parent holding company Abra Group have announced a support agreement that will enable the Brazilian airline, currently undergoing Chapter 11 financial reorganisation in the United States, to reduce its debt by approximately USD2.5 billion. The reduction will be achieved by converting a substantial portion of the debt into equity, extinguishing other parts, and replacing some debt with new, more favourable terms.
Owing to its Chapter 11 process (for which the airline recently requested a deadline extension), the airline will be able to deleverage up to USD1.7 billion worth of pre-bankruptcy debt by converting it into equity or extinguishing it entirely as well as up to USD850 million of other obligations, the carrier said in an SEC filing.
Abra Group, which owns of GOL, Avianca Group, and Wamos Air, claims the Brazilian carrier owes it USD2.8 billion. However, it has agreed to take on approximately USD950 million in new equity and USD850 million of take-back debt. Of the latter, USD250 million is set to convert into equity if certain conditions are met by the 30th month after GOL’s emergence from bankruptcy, set to take place by late April 2025.
Meanwhile, general unsecured creditors will receive up to USD235 million in equity, with the possibility of an increase if other financial issues are resolved in their favour.
As part of its exit financing plan, GOL expects to raise up to USD1.85 billion in new capital, primarily through secured debt, to pay off its current Debtor-in-Possession (DIP) financing (USD1 billion) and support its post-bankruptcy strategy.
The DIP loan plus USD375 million of new financing from lessors has allowed GOL to reinvest in its fleet, ungrounding most of its previously out-of-service aircraft. The ch-aviation fleets module shows GOL’s fleet comprises 135 aircraft - thirteen B737-700s, forty-nine B737-8s, sixty-seven B737-800s, and six B737-800(BCF)s.
"Reaching this agreement is another important step in our efforts to strengthen our financial position and drive GOL’s long-term success," said GOL’s chief executive, Celso Ferrer. Adrian Neuhauser, chief executive of Abra Group, pledged that the Brazilian airline will emerge from its Chapter 11 process with a dramatically improved liquidity position and a deleveraged balance sheet with a very competitive unit cost and strong network. “We also see significant opportunities to build on our efforts to capitalise on synergies among GOL, avianca, and Wamos,” he added.
