Azul Announces Expiration and Final Results of Previously Announced Exchange Offers in respect of Existing 2029 Second Out Notes and Existing 2030 Second Out Notes for New Notes and Solicitations of Consents to Proposed Amendments to the Existing Indenture

Rhea-AI Summary

Azul announces the completion of its exchange offers for its 2029 and 2030 Senior Secured Second Out Notes. The exchange offers, which expired on January 21, 2025, achieved significant participation rates: 98.02% of 2029 Notes and 94.51% of 2030 Notes were validly tendered, representing 95.55% of total outstanding notes.

The exchange offers exceeded the minimum requirement of 66.67% participation per series and 95% aggregate participation. The settlement will provide new notes with identical interest rates: 11.500% for 2029 Notes and 10.875% for 2030 Notes. Accrued interest will be paid in additional principal amount of New Notes rather than cash.

The completion remains subject to conditions including the issuance of at least $500 million in Superpriority Notes and the successful completion of the First Out Notes Exchange Offer.

Positive

• High participation rates achieved: 98.02% for 2029 Notes and 94.51% for 2030 Notes
• Successfully exceeded minimum exchange conditions
• Received sufficient consents to implement proposed amendments

Negative

• No cash payment for accrued interest on existing notes
• Settlement still subject to multiple conditions including $500M Superpriority Notes issuance

SÃO PAULO, Jan. 22, 2025 /PRNewswire/ -- Azul S.A., "Azul," (B3: AZUL4) (NYSE: AZUL) ("Azul") today announces the expiration and final results of the previously announced (i) offers by its wholly-owned subsidiary Azul Secured Finance LLP (the "Issuer") to Eligible Holders to exchange (the "Exchange Offers") (a) any and all of the outstanding 11.500% Senior Secured Second Out Notes due 2029 issued by the Issuer (CUSIP: 05501WAA0 / U0551YAA3, ISIN: US05501WAA09 / USU0551YAA39) (the "Existing 2029 Notes") for newly issued 11.500% Senior Secured Second Out Notes due 2029 to be issued by the Issuer (the "New 2029 Notes") and (b) any and all of the outstanding 10.875% Senior Secured Second Out Notes due 2030 issued by the Issuer (CUSIP: 05501WAB8 / U0551YAB1, ISIN: US05501WAB81 / USU0551YAB12) (the "Existing 2030 Notes" and, together with the Existing 2029 Notes, the "Existing Notes") for newly issued 10.875% Senior Secured Second Out Notes due 2030 to be issued by the Issuer (the "New 2030 Notes" and, together with the New 2029 Notes, the "New Notes"), and (ii) the solicitation of consents by the Issuer from Eligible Holders to certain proposed amendments to the terms of the Existing Notes of each series (the "Solicitations"). The Exchange Offers and the Solicitations were made 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 Offers and Solicitations (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.

The Exchange Offers and the Solicitations expired at 5:00 p.m., New York City time, on January 21, 2025 (the "Expiration Deadline").

As of the Expiration Deadline, Morrow Sodali International LLC, trading as Sodali & Co, the information agent and exchange agent in connection with the Exchange Offers and the Solicitations (the "Information and Exchange Agent") advised Azul that (i) 98.02% of the total outstanding principal amount of the Existing 2029 Notes, (ii) 94.51% of the total outstanding principal amount of the Existing 2030 Notes, and (iii) 95.55% of the total outstanding principal amount of both series of Existing Notes (taken together), had been validly tendered for exchange and not validly withdrawn. Therefore, the Minimum Exchange Condition (as defined below) for consummation of each of the Exchange Offers has been satisfied

The obligation of the Issuer to complete the Exchange Offers and related Solicitations with respect to either series of Existing Notes is subject to certain conditions described in the Offering Memorandum, which include (i) the receipt of Existing Notes validly tendered (and not validly withdrawn) prior to the Expiration Deadline representing not less than (a) 66.67% of the aggregate principal amount of each series of Existing Notes outstanding, and (b) 95% of the aggregate principal amount of both series of Existing Notes (taken together) (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 First Out Notes Exchange Offer in accordance with the terms set forth in the First Out Notes Exchange Offer Memorandum (which First Out Notes Exchange Offer is conditioned, among other conditions, on the participation of not less than 66.67% of the aggregate principal amount of the Existing First Out Notes (which participation condition has been satisfied), and (v) certain other customary conditions. Certain of these conditions are subject to waiver by Azul.

Subject to satisfaction or waiver of the conditions to the consummation of the Exchange Offers, Azul expects that settlement of the Exchange Offers will occur promptly and will announce the settlement date in due course (the "Settlement Date").

On the Settlement Date, the Issuer expects that it will accept for exchange and settle the Exchange Offers for all Existing Notes validly tendered (and not validly withdrawn) for the Total Early Consideration. The Issuer will not pay, on the Settlement Date, any accrued and unpaid interest in cash with respect to the Existing Notes accepted for exchange by the Issuer. However, Eligible Holders of Existing Notes that are accepted for exchange by the Issuer will receive any such accrued and unpaid interest with respect to such Existing Notes in the form of additional principal amount of New Notes issued on the Settlement Date.

In addition, as previously disclosed, the Issuer has received the requisite consents sufficient to effect the Proposed Amendments with respect to Existing Notes of each series. Therefore, in accordance with the terms set forth in the Offering Memorandum, on the Settlement Date, the Issuer intends to execute a supplemental indenture to effectuate the Proposed Amendments to the terms of the Existing Notes.

Miscellaneous

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 were eligible to participate in the Exchange Offers and the Solicitations. In addition, the New Notes may not be transferred to or held by a Competitor.

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 Offers and Solicitations were 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, made any recommendation as to whether Eligible Holders should tender or refrain from tendering all or any portion of the Existing Notes in response to either of the Exchange Offers, or deliver consents in response to the Solicitations. Eligible Holders were required to make their own decision as to whether to tender Existing Notes in the Exchange Offers and participate in the Solicitations 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.b3

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

Media Contact: +1 203 658 9457 and +44 20 4513 6933 or by email at azul@investor.sodali.com

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SOURCE Azul S.A.

FAQ

What was the participation rate in AZUL's 2029 Notes exchange offer?

98.02% of the outstanding 2029 Notes were validly tendered in the exchange offer.

What was the participation rate in AZUL's 2030 Notes exchange offer?

94.51% of the outstanding 2030 Notes were validly tendered in the exchange offer.

What is the minimum exchange condition for AZUL's notes exchange offers?

The minimum exchange condition required 66.67% participation per series and 95% of aggregate principal amount of both series combined.

How will accrued interest be paid in AZUL's notes exchange?

Accrued interest will be paid in the form of additional principal amount of New Notes rather than cash.

What are the interest rates for AZUL's new exchange notes?

The new notes maintain the same rates: 11.500% for 2029 Notes and 10.875% for 2030 Notes.