Azul Announces Expiration and Final Results of Previously Announced Exchange Offers of Certain Existing Notes for New Notes and the Solicitations of Consents to Proposed Amendments to the Existing Indentures

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Jul 13, 2023, 07:03 ET

SÃO PAULO, July 13, 2023 /PRNewswire/ -- Azul S.A., "Azul," (B3: AZUL4, NYSE: AZUL) ("Azul") today announces the expiration and final results of the previously announced: (i) separate offers by its wholly-owned subsidiary Azul Investments LLP (the "Existing Notes Issuer") to Eligible Holders (as defined below) to exchange (such offers, the "Exchange Offers") (a) any and all of the outstanding 5.875% Senior Notes due 2024 issued by the Existing Notes Issuer (the "Existing 2024 Notes") for newly issued 11.500% Senior Secured Second Out Notes due 2029 to be issued by Azul Secured Finance LLP (the "New Notes Issuer") (the "New 2029 Notes"), and (b) any and all of the outstanding 7.250% Senior Notes due 2026 issued by the Existing Notes Issuer (the "Existing 2026 Notes" and, together with the Existing 2024 Notes, the "Existing Notes") for newly issued 10.875% Senior Secured Second Out Notes due 2030 to be issued by the New Notes Issuer (the "New 2030 Notes," and together with the New 2029 Notes, the "New Notes"), and (ii) solicitation of consents by the Existing Notes Issuer from Eligible Holders to certain proposed amendments to the terms of the Existing Notes (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 June 13, 2023, 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.

Expiration and Final Results for the Exchange Offers

The Exchange Offers and the Solicitations expired at 11:59 p.m., New York City time, on July 12, 2023 (the "Expiration Deadline").

As previously announced, as of 5:00 p.m., New York City time, on June 27, 2023 (the "Early Participation Deadline"), Global Bondholder Services Corporation, the Exchange Agent and the Information Agent in connection with the Exchange Offers and the Solicitations (the "Information Agent") advised Azul that (i) US$291,170,000 in principal amount of the Existing 2024 Notes, and (ii) US$567,602,000 in principal amount of the Existing 2026 Notes, had been validly tendered for exchange and not validly withdrawn.

The Information Agent advised Azul that (i) US$3,045,000 in principal amount of the Existing 2024 Notes, and (ii) US$650,000 in principal amount of the Existing 2026 Notes, had been validly tendered for exchange and not validly withdrawn after the Early Participation Deadline and at or prior to the Expiration Deadline.

Therefore, in aggregate (i) US$294,215,000 in principal amount of the Existing 2024 Notes, representing 73.6% of the total outstanding principal amount of the Existing 2024 Notes, and (ii) US$568,252,000 in principal amount of the Existing 2026 Notes, representing 94.7% of the total outstanding principal amount of the Existing 2026 Notes, have been validly tendered for exchange and not validly withdrawn.

Settlement of the Exchange Offers and Effectiveness of Proposed Amendments

Azul expects that settlement of the Exchange Offers will occur on July 14, 2023 (the "Settlement Date"). On the Settlement Date, pursuant to the Exchange Offers, the New Notes Issuer expects that it will issue (i) US$294,215,000 in principal amount of the New 2029 Notes, and (ii) US$568,219,500 in principal amount of the New 2030 Notes.

The obligation of the Existing Notes Issuer to complete an Exchange Offer and related Solicitation with respect to either series of Existing Notes is subject to certain conditions described in the Offering Memorandum, which include (i) with respect to the Existing 2024 Notes, the receipt of Existing 2024 Notes validly tendered (and not validly withdrawn) prior to the Expiration Deadline representing not less than 70% of the aggregate principal amount of Existing 2024 Notes outstanding and, with respect to the Existing 2026 Notes, the receipt of Existing Notes validly tendered (and not validly withdrawn) prior to the Expiration Deadline representing not less than 70% of the aggregate principal amount of Existing Notes outstanding (conditions which were satisfied on the Early Participation Deadline), (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) certain amendments to the forbearance agreement entered into between Azul Linhas Aéreas Brasileiras S.A. ("Azul Linhas"), as lessee, and certain lessors of aircraft (the "Relevant Lessors"), and to the global partial deferral agreement entered into between Azul Linhas, as lessee, Azul, as guarantor, and the Relevant Lessors, and the related collateral and other documents are required to be replaced, (iv) the obtaining by Azul and certain of its subsidiaries of waivers and amendments from their creditors to certain financings agreements and arrangements entered into in the ordinary course of their business with certain financial institutions, and (v) certain other customary conditions. Certain of these conditions are subject to waiver by Azul. As of the date of this press release, certain conditions remain to be satisfied, and Azul expects that all conditions will be satisfied or waived on the expected Settlement Date of July 14, 2023.

On the Settlement Date, the Existing Notes Issuer expects that it will accept for exchange and settle the Exchange Offers for all Existing Notes validly tendered (and not validly withdrawn):

(i)	as of the Early Participation Deadline, for (a) the applicable Total Early Exchange Consideration, and (b) the related amount in cash equal to the accrued and unpaid interest, if any, from the last payment date for the Existing Notes of the relevant series up to, but not including, the Settlement Date; and

(ii)	after the Early Participation Deadline but at or prior to the Expiration Deadline, for (a) the applicable Total Early Exchange Consideration minus (in the case of the Existing 2026 Notes only) the applicable Early Exchange Premium, and (b) the related amount in cash equal to the accrued and unpaid interest, if any, from the last payment date for the Existing Notes of the relevant series up to, but not including, the Settlement Date.

In addition, as previously disclosed, as of the Early Participation Deadline, the Information Agent advised Azul that the Existing Notes Issuer had 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 Existing Notes Issuer intends to execute supplemental indentures to effectuate the Proposed Amendments to the terms of the Existing Notes, which will become operative on the Settlement Date upon the exchange of Existing Notes for New Notes and the payment of the Accrued Interest on such date, in accordance with the terms set forth in the Offering Memorandum.

Miscellaneous

The New Notes were offered for exchange only (a) in the United States to holders of Existing Notes who are reasonably believed to be "qualified institutional buyers" (as defined in Rule 144A under the Securities Act of 1933, as amended (the "Securities Act")) in reliance upon the exemption from the registration requirements of the Securities Act, and (b) outside the United States to holders of Existing Notes who are persons other than "U.S. persons" (as defined in Rule 902 under the Securities Act) in reliance upon Regulation S under the Securities Act. In addition, the New Notes may not be transferred to or held by a Competitor.

Only holders of Existing Notes who have properly completed and submitted the eligibility certification in electronic form (the "Eligible Holders") were authorized to receive and review the Offering Memorandum. Only Eligible Holders that also complied with the other requirements set forth in the Offering Memorandum were eligible to participate in the Exchange Offers and the Solicitations.

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 permitted under applicable law.

None of the Existing Notes Issuer, the New Notes Issuer, the Guarantors, any of their respective directors or officers, the Dealer Managers, the Financial Advisor, the Exchange Agent, the Information Agent, or the Trustees, 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 any 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.

This press release is being issued pursuant to and in accordance with Rule 135c under the Securities Act.

Cautionary Statement Regarding Forward-Looking Statements

This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included in this press release, and those statements preceded by, followed by or that otherwise include the words "may," "might," "will," "aim," "would," "could," "should," "believe," "understand," "expect," "anticipate," "intend," "estimate," "project," "target," "goal," "guidance," "budget," "plan," "objective," "potential," "seek," or similar expressions or variations on these expressions are forward-looking statements. Azul and its subsidiaries can give no assurances that the assumptions upon which the forward-looking statements are based will prove to be correct or that, even if correct, intervening circumstances will not occur to cause actual results to be different than expected. Because forward-looking statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by the forward-looking statements. There are a number of risks, uncertainties and other important factors that could cause the actual results of Azul and its subsidiaries to differ materially from the forward-looking statements, including, but not limited to the satisfaction or waiver of the conditions set forth in the Offering Memorandum, and those factors set out in the Offering Memorandum under "Risk Factors," in Azul's annual report on Form 20-F for the year ended December 31, 2022 under "Risk Factors," and in Azul's other filings with the U.S. Securities and Exchange Commission. Although Azul and its subsidiaries believe that the expectations reflected in the forward-looking statements are reasonable, Azul and its subsidiaries cannot guarantee future results, level of activity, performance or achievements. Moreover, neither Azul nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. Eligible Holders should not rely upon forward-looking statements as predictions of future events. The information included herein is given as of the date of this press release and, except as otherwise required by the applicable law, Azul and its subsidiaries disclaim any obligation or undertaking to publicly release any updates or revisions to, or to withdraw, any forward-looking statement contained in this press release to reflect any change in Azul's and its subsidiaries' expectations with regard thereto or any change in events, conditions or circumstances on which any forward-looking statement is based.

About Azul

Azul is the largest airline in Brazil in terms of departures and cities served, with around 1,000 daily departures to 158 destinations, creating an unparalleled network of more than 300 non-stop routes as of December 31, 2022. For more information, visit https://ri.voeazul.com.br. Information on Azul's website does not constitute a part of this press release.

SOURCE Azul S.A.