Azul Announces Extension of the Previously Announced Exchange Offer in respect of Existing 2028 First Out Notes for New Notes and Solicitation of Consents to Proposed Amendments to the Existing Indenture

Rhea-AI Summary

Azul has extended its exchange offer deadline for its 11.930% Senior Secured First Out Notes due 2028 from January 15, 2025, to January 21, 2025, at 5:00 p.m., New York City time. As of the original deadline, 99.69% of the outstanding notes had been validly tendered, satisfying the minimum exchange condition of 66.67%.

The withdrawal deadline expired on January 7, 2025, and holders can no longer withdraw tendered notes. The exchange offer is subject to several conditions, including the issuance of at least $500 million in Superpriority Notes and the completion of Second Out Notes Exchange Offers. The Second Out Notes Exchange Offers have achieved 95.48% participation, meeting the required 95% threshold.

Eligible holders who participated by the Early Participation Deadline will receive the Total Early Exchange Consideration. The company has also received sufficient consents to implement proposed amendments to the Existing Notes Indenture.

Positive

• High participation rate with 99.69% of notes tendered, exceeding the 66.67% minimum requirement
• Second Out Notes Exchange Offers achieved 95.48% participation, surpassing the 95% threshold
• Successful receipt of required consents for amendments to Existing Notes Indenture

Negative

• None.

Insights

Financial Restructuring Expert

This debt restructuring initiative by Azul demonstrates strong creditor support with 99.69% of existing noteholders participating in the exchange offer. The extension to January 21, 2025, provides additional flexibility while maintaining momentum. The high participation rate surpasses the critical 66.67% minimum threshold, indicating creditor confidence in the restructuring plan.

The exchange of 11.930% Senior Secured First Out Notes maintains the same interest rate while implementing necessary amendments to the indenture structure. The successful achievement of the 95.48% participation in Second Out Notes Exchange Offers (exceeding the 95% requirement) significantly de-risks the overall restructuring process. This comprehensive debt reorganization, including the planned $500 million Superpriority Notes issuance, should strengthen Azul's capital structure and enhance financial flexibility.

Corporate Bond Analyst

The market implications of this exchange offer are noteworthy. The maintenance of the 11.930% coupon rate in the new notes, combined with the overwhelming participation rate, suggests bondholders view this as a constructive solution rather than a distressed exchange. The introduction of Superpriority Notes in the capital structure indicates a strategic approach to liability management while preserving stakeholder interests.

The strong consent levels for indenture amendments and high participation rates across both First Out and Second Out notes demonstrate a coordinated approach to debt restructuring. This should improve Azul's debt maturity profile and potentially reduce refinancing risks. The tax considerations regarding fungibility between early and final settlement dates show careful structuring to maintain market liquidity and trading efficiency.

SÃO PAULO, Jan. 16, 2025 /PRNewswire/ -- Azul S.A., "Azul," (B3: AZUL4) (NYSE: AZUL) ("Azul") today announced that its wholly-owned subsidiary Azul Secured Finance LLP (the "Issuer") has extended the expiration deadline of its previously announced offer to exchange (the "Exchange Offer") any and all of the outstanding 11.930% Senior Secured First Out Notes due 2028 issued by the Issuer (CUSIP: 05501W AC6 / U0551Y AC9, ISIN: US05501WAC64/USU0551YAC94) (the "Existing Notes") for newly issued 11.930% Senior Secured First Out Notes due 2028 to be issued by the Issuer (the "New Notes"), pursuant to the terms and subject to the conditions set forth in the confidential exchange offering memorandum and consent solicitation statement, dated December 17, 2024 in respect of the Exchange Offer and Solicitation (the "Offering Memorandum").

Any capitalized terms used in this press release without definition have the respective meanings assigned to such terms in the Offering Memorandum.

Extension of Expiration Deadline

The Issuer hereby extends the expiration deadline for the Exchange Offer from 11:59 p.m., New York City time, on January 15, 2025 (the "Original Expiration Deadline") to 5:00 p.m., New York City time, on January 21, 2025 (as the same may be further extended, the "Extended Expiration Deadline"). The extension allows Eligible Holders who have not yet tendered their Existing Notes the opportunity to participate in the Exchange Offer. If the Issuer further extends the Exchange Offer, the Issuer will announce any extension of the Extended Expiration Deadline by no later than 9:00 a.m., New York City time, on the first business day after the Extended Expiration Deadline. The Issuer currently expects to announce the Settlement Date two days before such date.

Original Expiration Deadline Results for the Exchange Offer

As of the Original Expiration Deadline, Morrow Sodali International LLC, trading as Sodali & Co, the information agent and exchange agent in connection with the Exchange Offer and the Solicitation (the "Information and Exchange Agent") advised Azul that 99.69% of the total outstanding principal amount of the Existing Notes had been validly tendered for exchange and not validly withdrawn. Therefore, the Minimum Exchange Condition (as defined below) for consummation of the Exchange Offer has been satisfied.

The Withdrawal Deadline for the Exchange Offer expired at 5:00 p.m., New York City time, on January 7, 2025 and has not been extended. Accordingly, Holders may no longer withdraw Existing Notes tendered in the Exchange Offer, including, for the avoidance of doubt, any Existing Notes tendered on or after the date hereof and prior to the Extended Expiration Deadline, except as required by law.

Upon the terms and subject to the conditions set forth in the Offering Memorandum, Eligible Holders who validly tendered Existing Notes and delivered related Consents by the Early Participation Deadline and who did not validly withdraw tendered Existing Notes and did not revoke such Consents at or prior to the Withdrawal Deadline, and whose Existing Notes are accepted for exchange by the Issuer, will receive the Total Early Exchange Consideration.

Original Expiration Deadline Results for the Consent Solicitation

As previously announced, simultaneously with the Exchange Offer, the Issuer is conducting a Solicitation of Consents from Eligible Holders of the Existing Notes to effect the Proposed Amendments to the Existing Notes Indenture. As of the Original Expiration Deadline, the Information and Exchange Agent advised Azul that the Issuer has received the requisite Consents sufficient to effect the Proposed Amendments with respect to Existing Notes.

Conditions to the Consummation of the Exchange Offer

The obligation of the Issuer to complete the Exchange Offer and the Solicitation is subject to certain conditions described in the Offering Memorandum (the "Conditions"), which include (i) the receipt of Existing Notes validly tendered (and not validly withdrawn) prior to the Extended Expiration Deadline representing not less than 66.67% of the aggregate principal amount of Existing Notes outstanding (the "Minimum Exchange Condition"), (ii) certain amendments to the indenture (escritura de emissão de debêntures) governing the convertible debentures issued by Azul and certain collateral and other documents are required to be amended or replaced in respect of such convertible debentures, (iii) the issuance of at least US$500,000,000 in aggregate principal amount of the Superpriority Notes, secured by the Shared Collateral and other collateral on a "superpriority" basis, the issuance of which is subject to the terms and conditions of the Transaction Support Agreement, including the satisfaction of the conditions precedent set forth therein, (iv) the consummation of Second Out Notes Exchange Offers in accordance with the terms set forth in the Second Out Notes Exchange Offer Memorandum (which Second Out Notes Exchange Offers are conditioned, among other conditions, on the participation of not less than 95% of the aggregate principal amount of both series of Existing Second Out Notes (taken together) (the "2L Participation Condition")), (v) if the Issuer elects to have an Early Settlement Date, the Issuer shall determine that the New Notes issued by the Issuer on the Final Settlement Date will be fungible with the New Notes issued by the Issuer on the Early Settlement Date for U.S. federal income tax purposes, and (vi) certain other customary conditions. Certain of these conditions are subject to waiver by Azul.

The Information and Exchange Agent has advised Azul that, as of the original expiration deadline for the Second Out Notes Exchange Offers (which has also been extended to the Extended Expiration Deadline), 95.48% of the aggregate principal amount of both series of Existing Second Out Notes (taken together) had been validly tendered and not validly withdrawn. Accordingly, the 2L Participation Condition has been satisfied.

Miscellaneous

Except as amended by this press release and the press release dated January 8, 2025, the terms and conditions of the Exchange Offer and the Solicitation, as previously announced and described in the Offering Memorandum, remain unchanged. Azul provided certain information relating to the Exchange Offer and the Solicitation in Forms 6-K furnished to the Securities and Exchange Commission on December 18, 2024, January 8, 2025 and January 16, 2025.

The offering, issuance and sale of the New Notes have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws. Only Eligible Holders of Existing Notes who have properly completed and submitted the Eligibility Certification are authorized to receive and review the Offering Memorandum. The Eligibility Certification requires holders of Existing Notes to certify, among other things, that they are either (1) a U.S. Person that is also a qualified institutional buyer (as defined in Rule 144A under the Securities Act) that is not, has not been during the prior three months prior, and on the applicable Settlement Date will not be, a director, officer or "affiliate" (as defined in Rule 144 under the Securities Act) of the Issuer or any other Obligor; or (2) a person other than a U.S. Person (as defined in Rule 902(k) under the Securities Act) that is outside the United States. Only Eligible Holders that also comply with the other requirements set forth in the Offering Memorandum are eligible to participate in the Exchange Offer and the Solicitation. In addition, the New Notes may not be transferred to or held by a Competitor.

Holders who desire to obtain and complete an eligibility certification and access the Offering Memorandum should visit the website for this purpose at https://projects.sodali.com/azul or contact the Information and Exchange Agent. Requests for documentation and questions regarding the Exchange Offer and the Solicitation can be directed to Sodali & Co at its telephone numbers +1 203 658 9457 and +44 20 4513 6933 or by email at azul@investor.sodali.com.

No Offer or Solicitation

This press release does not constitute an offer to buy or the solicitation of an offer to sell the Existing Notes in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. This press release does not constitute an offer to sell or the solicitation of an offer to buy the New Notes, nor shall there be any sale of the New Notes in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. The New Notes will not be registered under the Securities Act or the securities laws of any state and may not be offered or sold in the United States absent registration or an exemption from the registration requirements of the Securities Act and applicable state securities laws. The Exchange Offer and Solicitation are being made only pursuant to the Offering Memorandum and only to such persons and in such jurisdictions as is permitted under applicable law.

The New Notes have not been and will not be issued or placed, distributed, offered or traded in the Brazilian capital markets. The issuance of the New Notes has not been nor will be registered with the CVM. Any public offering or distribution, as defined under Brazilian laws and regulations, of the New Notes in Brazil is not legal without prior registration under Brazilian Securities Markets Law, and CVM Resolution 160, dated July 13, 2022, as amended. Documents relating to the offering of the New Notes, as well as information contained therein, may not be supplied to the public in Brazil (as the offering of the New Notes is not a public offering of securities in Brazil), nor be used in connection with any offer for subscription or sale of the New Notes to the public in Brazil, except to professional investors (as defined under Brazilian laws and regulations), and in accordance with CVM Resolution 160. The New Notes will not be offered or sold in Brazil, except in circumstances, which do not constitute a public offering, placement, distribution or negotiation of securities in the Brazilian capital markets regulated by Brazilian legislation. Holders of Existing Notes should consult with their own counsel as to the applicability of registration requirements or any exemption therefrom.

None of the Issuer, the Guarantors, any of their respective directors or officers, the Information and Exchange Agent, or the Existing Notes Trustee, the New Notes Trustee, or in each case, any of their respective affiliates, makes any recommendation as to whether Eligible Holders should tender or refrain from tendering all or any portion of the Existing Notes in response to the Exchange Offer, or deliver Consents in response to the Solicitation. Eligible Holders will need to make their own decision as to whether to tender Existing Notes in the Exchange Offer and participate in the Solicitation and, if so, the principal amount of Existing Notes to tender.

Cautionary Statement Regarding Forward-Looking Statements

This press release includes forward-looking statements within the meaning of the U.S. federal securities laws. These forward-looking statements are based mainly on our current expectations and estimates of future events and trends that affect or may affect our business, financial condition, results of operations, cash flow, liquidity, prospects and the trading price of our securities (including the Existing Notes and the New Notes), including the potential impacts of the material transactions referred to in this press release. Although we believe that any forward-looking statements are based upon reasonable assumptions in light of information currently available to us, any such forward-looking statements are subject to many significant risks, uncertainties and assumptions, including those factors discussed under the heading "Risk Factors" in the company's annual report on Form 20-F for the year ended December 31, 2023 and any other cautionary statements which may be made or referred to in connection with any such forward-looking statements.

In this press release, the words "believe," "understand," "may," "will," "aim," "estimate," "continue," "anticipate," "seek," "intend," "expect," "should," "could," "forecast" and similar words are intended to identify forward-looking statements. You should not place undue reliance on such statements, which speak only as of the date they were made. Except as required by applicable law, we do not undertake any obligation to update publicly or to revise any forward-looking statements after the date of this press release because of new information, future events or other factors. Our independent public auditors have neither examined nor compiled the forward-looking statements and, accordingly, do not provide any assurance with respect to such statements. In light of the risks and uncertainties described above, the future events and circumstances discussed in this press release might not occur and are not guarantees of future performance. Because of these uncertainties, you should not make any investment decision based upon these forward-looking statements.

About Azul

Azul S.A. (B3: AZUL4) (NYSE: AZUL), the largest airline in Brazil by number of flight departures and cities served, offers 1,000 daily flights to over 160 destinations. With an operating fleet of over 180 aircraft and more than 15,000 Crewmembers, Azul has a network of 300 non-stop routes. Azul was named by Cirium (leading aviation data analysis company) as the most on-time airline in the world in 2022, being the first Brazilian airline to obtain this honor. In 2020, Azul was awarded best airline in the world by TripAdvisor, the first time a Brazilian flag carrier earned the number one ranking in the Traveler's Choice Awards.

For more information visit https://ri.voeazul.com.br/en. Information on Azul's website does not constitute a part of this press release.

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SOURCE Azul S.A.

FAQ

What is the new deadline for Azul's (AZUL) 2028 notes exchange offer?

The new deadline for Azul's exchange offer has been extended to 5:00 p.m., New York City time, on January 21, 2025.

What percentage of Azul's (AZUL) existing notes were tendered by the original deadline?

99.69% of the total outstanding principal amount of the Existing Notes had been validly tendered for exchange by the original deadline of January 15, 2025.

What is the minimum exchange condition for Azul's (AZUL) notes exchange offer?

The minimum exchange condition requires not less than 66.67% of the aggregate principal amount of Existing Notes to be tendered.

What is the participation rate required for Azul's (AZUL) Second Out Notes Exchange Offers?

The Second Out Notes Exchange Offers require a minimum participation of 95% of the aggregate principal amount of both series of Existing Second Out Notes.