Global law firm White & Case LLP has advised Azul Airlines, a leading Brazilian airline company, on the restructuring of its aircraft lease obligations across its fleet, as well as a restructuring of its obligations to original equipment manufacturers and existing bondholders. The transaction closed on September 29, 2023.
The restructuring achieved (i) the permanent elimination of lease payment obligations that had previously been deferred during the COVID-19 pandemic; (ii) a permanent reduction in lease payments from original contractual lease rates to agreed-upon current market rates; (iii) the deferral of certain payments to lessors and OEMs, as well as certain obligations under supplier agreements; and (iv) other concessions including improved end-of-lease compensation obligations and aircraft return conditions, the elimination of future maintenance reserves payments, and the negotiated early termination of certain aircraft leases.
Under the terms of the transaction, Azul Airlines and the creditors involved in the restructuring agreed to exchange existing debts and future rent reductions for notes payable in 2030 and preferred equity in Azul Airlines, whereby 40 percent of such outstanding amounts or rent reductions were repaid by way of Azul Airlines' issuance of such notes, and 60 percent of such outstanding amounts or rent reductions are to be deemed repaid periodically by way of Azul Airlines' issuance of preferred equity.
In connection with these agreements, the parties also agreed to receive an aggregate of up to US$570 million in Azul's preferred shares valued at R$36.00 per share.
The White & Case team was led by Asset Finance partner Todd Wolynski (New York), counsel David Wright (London), and associates Brian Schmelkin, Andrew Maury, Mae Espinosa (all in Miami), Gahyun Kim, Ijeoma Oti (both in New York), James Holder, Leo Colle (both in London), Matt Reznick (Los Angeles) and Beatriz Barros (São Paulo). The team also included partners Christian Hansen (Mexico City), Anna Andreeva, Richard Kebrdle (both in Miami), John Guzman (São Paulo), Kim Havlin and Isaac Glassman (both in New York); local partner Zahra Knapper (Dubai); counsel Ric Graham (New York); and associates Rosa Llamo, Christina Fernandez (both in Miami), Joan Martinez, Jeffrey Godly, Jesse Fleck, Michael Sciascia (all in New York) and Aida Fernandez Laez (Mexico City). Trainee Mitchell Riding assisted on the matter.
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