GOL Linhas Aéreas Inteligentes (G3, São Paulo Congonhas) has gained access to USD451 million of cash after the Brazilian airline closed a USD1.4 billion private placement with its controlling shareholder, Abra Group, of its senior secured notes due in 2028.

The transaction represents one of the largest completed liability management and comprehensive refinancing transactions in the airline industry and emerging markets, the airline said in a stock market filing.

It also represents the tenth liability management or capital raising that GOL has completed since the onset of Covid-19.

The airline reported significant improvements in its capital structure and its credit profile due to the access to cash and a reduction in annual interest payments.

The issuance on March 3, 2023, included USD451 million in cash for specific uses subject to certain conditions and approvals, and the contribution and retirement of USD1.077 million in face value of GOL's outstanding bonds. This represents 83% of the bonds maturing in 2024, 47% of the bonds maturing in 2025, 61% of the bonds maturing in 2026, and 10% of the perpetuals. These bonds have been cancelled, representing a discount to par of USD312.6 million. Pro forma for the transaction, the net debt of GOL will be reduced by over USD100 million, resulting in more than USD30 million in annual interest expense savings.

As reported, the notes bear an interest rate of 18%, of which 4.5% will be paid in cash and 13.5% will be payment-in-kind and are guaranteed by the intellectual property and brand of Smiles, the airline's loyalty programme, and a lien on the intellectual property, brand, and spare parts of GOL.

Meanwhile, on March 1, 2023, Abra Group became the new parent company for GOL and avianca airlines (AV, Bogotá) when the former controlling shareholder, Mobi Fundo de Investimento em Ações Investimento no Exterior (Mobi), transferred all its shares to the Abra Group.

The shares will be transferred to two companies incorporated under the laws of England and Wales, Abra Mobi LLP and Abra Kingsland LLP, each holding 50% of the common shares.

Abra Mobi LLP is controlled by Mobi, owned by the three billionaire Constantino brothers from Brazil, while Abra Kingsland LLP is controlled by Kingsland, the financial holding of the Kriete family.