Azul creditors said to be asked for capital to back equity raise

An investment bank has approached Azul SA creditors to drum up fresh capital to backstop an equity raise as part of the Brazilian airline’s debt restructuring plan, according to people familiar with the matter. PJT Partners has been calling the air carrier’s existing bondholders to discuss options, said the people, who asked not to be named as the talks are private. [caption id="attachment_15580" align="aligncenter" width="1032"] (Courtesy/Azul)[/caption] One possible structure, laid out in a regulatory filing earlier this month, involves raising up to 900 million reais in debt instruments to be guaranteed by some credit and debit card receivables generated by its passenger airline business, according to the filing. Fresh liquidity would support the offering and help the company improve its cash position, the people said. The talks are ongoing and financing may not happen, they added. PJT Partners declined to comment. Azul declined to comment. Restructuring plan Azul earlier this month announced a new equity capital raise as part of its restructuring plan. The company on late Wednesday announced the issuance of 464.1 million shares at 3.58 reais apiece, in an offering totaling 1.7 billion reais. Azul said in a statement that the offering aims to not only raise new funds, but also enables a mandatory debt-to-equity conversion. The effort to raise new equity capital comes against a challenging backdrop, with lackluster interest for Brazilian equities and depressed trading volumes. The stock slumped to a record low after Thursday’s open and is now down around 70% over the last twelve months. Azul has cut deals with its lessors and bondholders to reduce debt and completed a debt-for-equity swap. The sector has struggled with high interest rates, volatile fuel costs and a weaker Brazilian real. JPMorgan Chase & Co. strategists this month downgraded Azul’s second lien bonds due in 2029 and 2030 to underweight. They said currency weakness, tight liquidity and weaker investor sentiment require “an even more cautious stance” toward the airline’s debt.

Azul creditors said to be asked for capital to back equity raise

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