Azul Prices $148.7M Senior Secured Notes Due 2028 at 11.930% Coupon

TL;DR

**Azul just took on another $148.7M in debt at a high 11.930% interest rate.**

AI Summary

On February 5, 2024, Azul S.A.'s subsidiary, Azul Secured Finance LLP, priced a re-tap offering of US$148.7 million in Senior Secured First Out Notes due 2028. These new notes carry an 11.930% coupon and were issued at 100.625% of their principal amount, resulting in a yield to maturity of 11.749%. This matters to investors because it indicates Azul is taking on additional debt, albeit secured, to finance its operations, which could impact future earnings and the company's financial leverage.

Why It Matters

This new debt issuance increases Azul's financial obligations, which could affect its profitability and cash flow, especially given the high 11.930% coupon rate.

Risk Assessment

Risk Level: medium — The issuance of additional secured debt with a high coupon rate increases the company's leverage and interest expense, posing a moderate risk to future profitability.

Analyst Insight

An investor should monitor Azul's upcoming earnings reports for increased interest expenses and evaluate the company's ability to service this new debt, especially given the high coupon rate, before making further investment decisions.

Key Numbers

• $148.7 million — Aggregate Principal Amount (The total value of the Senior Secured First Out Notes due 2028 issued by Azul's subsidiary.)
• 11.930% — Coupon Rate (The annual interest rate Azul will pay on the new Senior Secured First Out Notes.)
• 2028 — Maturity Year (The year the Senior Secured First Out Notes are due to be repaid.)
• 100.625% — Reopening Issue Price (The price at which the new notes were sold, indicating they were issued at a premium to their principal amount.)
• 11.749% — Yield to Maturity (The total return an investor can expect if they hold the notes until maturity, considering the issue price and coupon rate.)

Key Players & Entities

• Azul S.A. (company) — the registrant issuing the 6-K filing
• Azul Secured Finance LLP (company) — subsidiary that priced the re-tap offering
• US$148.7 million (dollar_amount) — aggregate principal amount of the new notes
• February 5, 2024 (date) — date Azul announced the pricing of the notes
• Azul Linhas Aéreas Brasileiras S.A. (company) — guarantor of the new notes
• IntelAzul S.A. (company) — guarantor of the new notes
• ATS Viagens e Turismo Ltda. (company) — guarantor of the new notes
• Azul IP Cayman Holdco Ltd. (company) — guarantor of the new notes
• Azul IP Cayman Ltd (company) — guarantor of the new notes

Forward-Looking Statements

• Azul's interest expenses will increase in the near term due to the high coupon rate of the new notes. (Azul S.A.) — high confidence, target: Q1 2024 earnings report
• The additional debt could put pressure on Azul's credit ratings if not managed effectively. (Azul S.A.) — medium confidence, target: Next credit rating review

FAQ

Key Financial Figures

• $148.7 million — ship, has priced a re-tap offering of US$148.7 million aggregate principal amount of Senior Se

Filing Documents

• azul20240205_6k.htm (6-K) — 28KB
• azul202402056k_001.jpg (GRAPHIC) — 3KB
• 0001292814-24-000315.txt ( ) — 33KB

Forward-Looking Statements

Forward-Looking Statements This communication includes estimates and forward-looking statements within the meaning of the U.S. federal securities laws. These estimates and forward-looking financial condition, results of operations, cash flow, liquidity, prospects and the trading price of our securities. Although we believe that these estimates and forward-looking statements are based upon reasonable assumptions in light of information currently available to us, they are subject to many significant risks, uncertainties and assumptions, including those factors discussed under the heading "Risk Factors" in the Company's annual report on Form 20-F for year ended December 31, 2022 and any other cautionary In this communication, the words "believe," "understand," "may," "will," "aim," "estimate," "continue," "anticipate," "seek," "intend," "expect," "should," "could," "forecast" and similar words are intended to identify forward-looking statements. You should not place undue reliance on such statements, which speak only as of the date they were made. Except as required by applicable law, we do not undertake any obligation to update publicly or to revise any forward-looking statements after the date of this communication because of new information, future events, or other factors. Our independent public auditors have neither examined nor compiled the forward-looking statements and, accordingly, do not provide any assurance with respect to such statements. In light of the risks and uncertainties described above, future events and circumstances discussed in this communication might not occur and are not guarantees of future performance. Because of these uncertainties, you should not make any investment decision based upon t

SIGNATURES

SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: February 5, 2024 Azul S.A. By: /s/ Alexandre Wagner Malfitani Name: Alexandre Wagner Malfitani Title: Chief Financial Officer

View Full Filing

View this 6-K filing on SEC EDGAR