Brazil’s Gol and its majority investor, Abra Group, have reached agreement on a debt-for-equity deal to support the carrier’s exit from Chapter 11 bankruptcy protection.
The agreement, which comes ten months after the Brazilian airline entered the formal financial restructuring process, will eliminate up to $2.55 billion in debt from the carrier’s books and see Abra receive around $950 million in new Gol equity.
“Pursuant to the [plan], Gol will file a Chapter 11 plan of reorganization that will allow it to effectuate a significant deleveraging by converting into equity, or otherwise extinguishing, up to $1.7 billion of its pre-petition funded debt and up to $850 million of other obligations,” the company says.
“Gol and its stakeholders benefit from removal of cost and uncertainty of any litigation regarding these asserted claims and move to the next phase of the Chapter 11 cases.”
In addition, the airline hopes to raise $1.85 billion of new capital to repay its debtor in-possession (DIP) loan and provide incremental liquidity to support Gol’s strategy following its emergence from the bankruptcy protection process. Of that, up to $330 million will be raised in new equity.
Gol had received a DIP loan of $1 billion after filing for Chapter 11 protection in January. The airline used the funds to invest its aircraft fleet.
“Reaching this agreement is another important step in our efforts to strengthen our financial position and drive Gol’s long-term success,” says chief executive Celso Ferrer. “We are pleased to be moving forward with the support of our key financial stakeholders, which reflects their confidence in our business plan and the significant opportunities ahead for Gol.”
He adds that with this agreement in place “most of the key terms of our restructuring plan” are complete. The airline plans to file the new plan with the bankruptcy court before the end of this year, and says it expects to emerge from the process “by late April 2025”.
“Gol is slated to 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.” Adds Abra Group chief executive Adrian Neuhauser. “We also see significant opportunities to build upon our efforts to capitalize on synergies among Gol, Avianca and our other partner airlines.
Last month, Madrid-based Wamos Air officially joined Abra Group, five months after the companies first announced the transaction. Wamos, founded in 2003, will maintain its leadership, brand, talent, teams, culture and operations – similar to how Gol and Avianca are operating under the Abra holding company structure.
