Machado Meyer on Azul debt restructuring
Machado Meyer has advised Knighthead Capital Management and Certares Management, as holders of Azul’s Senior Secured Convertible Debentures with Additional Personal Guarantee, in the context of the restructuring of Azul’s debt.
The Restructuring involved the renegotiation and equalization of terms and conditions between creditors from different jurisdictions (Brazil and the US), holders of different Azul’s debt instruments, such as the creditors of Azul’s leasing contracts and promissory notes, with the drafting, negotiation, analysis and review of documents such as the intercreditor agreement, amendments to existing debt instruments and guarantees, as well as the drafting, negotiation, analysis and review of new guarantee agreements and ancillary agreements, such as collateral account agreements, among others.
Specifically in relation to the Debentures, the “Second Amendment to the First Azul First Issue Senior Secured Convertible Debenture Agreement” was executed on 14 July 2023.
The Restructuring also involved challenging aspects related to (i) changes in the structure and conditions of convertibility and the interest rate of the Notes and the creation of a structure that allows for the conversion of part of the debts into equity, (ii) the completion of an Exchange Offer of the Notes to optimize Azul’s debt profile and capital structure, as well as (iii) the raising of funds through a capital increase, among other aspects to equalize Azul’s level of indebtedness and increase its competitiveness in the market.
The value of this transaction amounted to $1,745,900,000.00 Brazilian reals (USD $368,582,165.17) and involved the countries of Brazil, the United States, Ireland, Luxembourg and the United Kingdom. Milbank also advised on the transaction.
The transaction involved the negotiation with creditors of various nationalities and holders of different types of debt, through the execution of amendments to the existing debt and security agreements, as well as the drafting, negotiation, analysis and review, among such creditors, of new security agreements and ancillary agreements in the scope of the Restructuring.
Machado Meyer’s team was led by partners Bruno Janikian Racy (pictured left) and Luis Filipe Gentil Pedro (pictured right), assisted by lawyers Aline Antonio, Carolina Maronez Barreto and Rafaela Alencar Gomes.
