GOL Linhas Aéreas Inteligentes (G3, São Paulo Congonhas) and LATAM Airlines Brasil (JJ, São Paulo Congonhas) have both announced their willingness to acquire select assets currently held by Avianca Brasil (São Paulo Congonhas).
In a stock market disclosure, Gol said it would partner funds controlled by Elliott Management to submit a proposal to acquire select assets from Avianca Brasil (São Paulo Congonhas). The New York-based private equity firm is the distressed Brazilian carrier's largest creditor and is owed approximately USD515 million.
Gol said it had opened talks with Manchester Securities Corp., Elliott Associates, and Elliott International on March 27 over the proposal which would rival a USD105 million bid pitched by rival Azul Linhas Aéreas Brasileiras (AD, São Paulo Viracopos). Azul plans to acquire an isolated business unit (Unidade Produtiva Isolada - UPI - or NewCo) named Life Air which will contain Avianca Brasil's Air Operator's Certificate (AOC), 70 airport slot pairs at São Paulo Congonhas, Rio de Janeiro Santos Dumont, and São Paulo Guarulhos, and approximately thirty A320 Family aircraft.
According to Gol, its proposal with Elliott envisages the establishment of seven UPIs for Avianca Brasil which will then be auctioned off as part of the Revised Judicial Restructuring Plan. Of those seven, six will hold the carrier's Congonhas, Santos Dumont, and Guarulhos slots as well as its AOCs while a seventh will hold assets related to its Amigo frequent flyer program. Unlike the Azul proposal, under the Gol/Elliott plan, bidders will be able to submit offers for one or more of the UPIs.
Gol and LATAM Airlines Group have both confirmed they will make separate minimum offers of USD70 million for at least one of the UPIs.
In terms of funding for Avianca Brasil, Gol said it would avail short-term post-petition financings, of USD5 million and USD3 million in principal amounts to be provided on April 9, 2019 and April 16, 2019, respectively. Gol will also acquire from Elliot up to USD5 million in short-term post-petition financings, to the extent those are provided by Elliot to Avianca Brasil between April 2 and 5, 2019, at par value.
For its part, LATAM Airlines Brazil will extend up to USD13 million worth of debtor–in–possession loans to Avianca Brasil to shore up, in part, its working capital. That amount would then be reimbursed to LATAM Airlines Brazil if the Gol/Elliott restructuring proposal is successful.
GOL has also agreed to advance USD35 million to Elliott in four monthly instalments. This amount will then be returned by Elliott to GOL if the proposed UPI sale is successful or if another proposal involving the sale of Avianca Brasil's slots goes through.
GOL added that in the event it acquires any UPI, it will retain the relevant Avianca Brasil staff associated with that particular UPI's activity.
A second General Creditors' Meeting will be held on April 5 during which time Avianca Brasil's creditor firms will vote on which of the two proposals to accept if any.
