US court accepts Gol’s request for judicial recovery

[ad_1]

Decision prevents creditors from obtaining assets or properties from the airline, in addition to suspending actions against the company. Gol plane prepares to land at Santos Dumont airport, in Rio de Janeiro. Reuters/Sergio Moraes The New York Bankruptcy Court accepted this Friday (26) Gol’s request for judicial recovery. With the decision, creditors are prevented from obtaining assets or properties from the airline. The measure also suspends actions against the company. Gol announced on Thursday (25) that it filed a request for debt restructuring in the United States Court through Chapter 11, similar to judicial recovery in Brazil. Through the process, the company will have access to financing of US$950 million. (understand more below) According to Gol, the objective of the process is to restructure its short-term financial obligations and “strengthen its capital structure for long-term sustainability”. The company’s debts are estimated at R$20 billion. Despite the process, Gol reported that all flights are operating as scheduled and all airline tickets and reservations remain in force. The statement was reinforced by the company’s CEO, Celso Ferrer, in an interview with journalists. “The restructuring process aims to optimize Gol to sustain growth. We should not reduce the number of aircraft in service. The focus is to address liabilities during this period and organize the flow from now on,” he stated. According to the company, the Smiles loyalty program will also not change and will continue to be available. Debt restructuring In practice, the company activated a legal instrument in the United States known as “Chapter 11” (similar to Brazilian judicial recovery), used by companies to suspend the execution of debts and carry out financial and operational restructuring. The filing was filed in the U.S. Bankruptcy Court for the Southern District of New York. According to Gol’s CEO, Celso Ferrer, the company opted for the process in the North American Court after a recommendation from the company’s lawyers in the country. Even with the measure, Gol can operate normally. The airline also reported that it secured US$950 million in financing to support its business, in the debtor-in-possession modality (debtor in possession, in the free translation) — a type of loan made in a judicial recovery environment. With approval this Friday by the US Court, the company will have access to these resources. The credit will be obtained through a group of investors “who already know the company”, said Ferrer. They are members of the Ad Hoc Group of Bondholders (investors who hold debt securities) of Abra — the holding company that controls Gol —, in addition to other Abra Bondholders. “Along with the cash generated by ongoing operations, [o financiamento] will provide substantial liquidity to support operations, which continue normally during the financial restructuring process”, concluded, in a note, the airline. What led Gol to request recovery? According to analysts, Gol has solid operational numbers in light of the good demand for air travel in Brazil. High leasing and interest expenses, however, have pressured its cash flow and affected its debt profile. The company has also faced capacity issues amid delays in deliveries of Boeing aircraft — which, according to the company’s executive president, prevented Gol from growing at the pace it would like. Other causes of the current situation, according to the company, are the effects of the Covid-19 pandemic — which increased fuel prices and influenced the devaluation of the real against the dollar. Gol held a 33% market share in the Brazilian aviation industry last year, second only to Latam Brasil — as defined by passenger revenue per kilometer, which measures the traffic. Suspension on the New York Stock Exchange and downgrade In a statement to investors this Friday, Gol informed that the New York Stock Exchange (NYSE) suspended trading in the company’s American Depositary Shares (ADSs). ADSs are shares of non-US companies available on the exchange. The company said it does not intend to appeal the decision. Also this Friday, the risk rating agency Fitch Ratings downgraded Gol’s long-term credit rating in local and foreign currency from “CCC-” to “D”. The measures are a consequence of the restructuring request by Chapter 11. *With information from Reuters

[ad_2]

Source link