The Brazilian airline Azul launched a primary share offering to raise approximately R$ 7.44 billion (US$ 1.38 billion) aimed at settling financial debts. This financial transaction represents a key step for the airline to complete its Chapter 11 process in the United States and strengthen its balance sheet through the conversion of debt into equity.
According to documents filed with the market, the offering includes the issuance of 723,861,340,715 new ordinary shares and an equal number of preferred shares. Investors will receive a subscription warrant for each share acquired, allowing them to increase their equity stake in the future under pre-established technical conditions.
Concurrently with the offering, the company’s shares in the form of American Depositary Receipts (“ADRs”) and the related subscription warrants were privately placed outside Brazil, exclusively to certain creditor entities acting on behalf of the holders of the company’s notes.
These transactions were exempt from or not subject to registration under the U.S. Securities Act of 1933, as amended (the “Securities Act”), including those pursuant to Section 1145 of the U.S. Bankruptcy Code and/or Regulation S of the Securities Act.
TozziniFreire represented UBS BB Corretora de Câmbio, Títulos e Valores Mobiliários S.A., which acted as “initial purchaser.” The transaction follows the approval, on December 12, of the airline’s recovery plan by the U.S. courts.
Challenging Aspects
The offering was particularly challenging, as it formed part of the company’s Chapter 11 Restructuring Plan, which required the mandatory conversion of all of Azul’s outstanding senior secured notes into shares and, as a result, led to the company no longer having controlling shareholders, TozziniFreire noted.
The firm also stated that it was the second-largest share offering since the privatization of Eletrobras in 2023. “Given the extremely low share price, it was necessary to coordinate with the Securities Commission and the stock exchange to offer the shares in bundles (“baskets”).”
The new shares began trading on B3 on January 8, with settlement on January 9. The crediting of the shares and warrants took place on January 12. Therefore, this marks a new milestone in Azul’s share offering as part of its restructuring process.
Azul is Brazil’s largest airline in terms of cities served and domestic direct routes, with over 800 daily flights to 137 destinations. With a fleet of approximately 200 aircraft, Azul operates a network of 250 direct routes. Its flight network also includes select international destinations.
Background
The path that led Azul to judicial reorganization began in recent years amid intense pressure on its cash flow. The effects of the COVID-19 pandemic on demand, combined with costs, exchange rate fluctuations, and debt growth (which exceeded R$ 31 billion), impacted its finances.
This situation led to lengthy negotiations with creditors prior to the share offering and Azul’s formal request for bankruptcy protection (Chapter 11) on May 28, 2025.
Legal Representatives
Advisors to UBS BB Corretora de Câmbio, Títulos e Valores Mobiliários S.A.:
- TozziniFreire: Partner Daniel Laudisio. Counsel Sara de Pádua Abdu. Associate Marina Maia de Souza. In-house João Guilherme Echeverria Peralta.
Advisors to Azul S.A.:
- Pinheiro Neto Advogados: Guilherme Sampaio Monteiro, Joamir Müller Romiti Alves, Carolina Kiyomi Iwamoto, Marcelo Mammocci Pompilio, Gabriela Kaneshiro Pereira, Julia Barbosa Campos, Elena Carvalho Carrasco, Pedro Henrique Geenen Cota, Henrique Sampaio Hennies Pratas da Costa, César Inoue Emeterio Silva, Paulo Machado de Carvalho Filho, Vitória Costa Nassar, and Lucas Consentino.
- Hogan Lovells: Jonathan Lewis.
Representatives of Azul S.A. and its subsidiaries:
- Davis Polk: Partners Timothy Graulich, Manuel Garcia Diaz, Ben Kaminetzky, Lara Samet Buchwald, and James A. Florack. Counsels Joshua Y. Sturm, Stephen D. Piraino, Jarret Erickson, Richard J. Steinberg, Konstantinos Papadopoulos, Marc J. Tobak, and Yuko Sin. Associates Andrew Frisoli, Motty (Mordechai) Rivkin, and Benjamin Weissler.
