Transaction will be completed if Gol manages to complete the judicial recovery process in the United States
A and , the largest creditor and main investor of , signed this Wednesday (15 January 2025) a memorandum of understanding to explore the feasibility of a merger between the two companies.
Still in its initial phase, the transaction could be completed if Gol completes the remaining stages of its judicial recovery process in the United States – the Chapter 11. The restructuring plan, filed on November 29, 2024, intends to convert a significant portion of the company’s debt into capital. Here is the statement (PDF – 100 kB).
Under the terms of the agreement, if the merger is completed, the two companies would maintain their brands and operations independently.
On January 2, Gol entered into an individual transaction agreement with the Brazilian government to settle tax debts worth R$5.5 billion.
The amount will pay the installments of social security and non-social security debts, in addition to applying discounts on fines, interest and charges. It also allows part of the outstanding balance to be deducted through tax losses and a negative calculation basis for CSLL (Social Contribution on Net Profit).
The agreement was signed with the (Attorney General of Finance) and the (Special Secretariat of the Federal Revenue of Brazil). The AGU (Advocacy General of the Union) agreed to the tax debts totaling R$ 7.5 billion.
RECOVERY
When signing the debt settlement agreement with the Union, Gol said it was analyzing a possible merger with Azul. The company had also said that other partnership options, such as a joint-venturewere on the table.
The airline stated that it intends to raise US$ 1.85 billion (R$ 11.2 billion) to provide liquidity to its accounts and that the issuance of new shares is a way to enable the leverage of part of the amount. Gol informs that some of the company’s shares can be converted into shares of its holding Open, in case of a merger with Azul.
The first hearing to discuss the plan with creditors is scheduled for January 15th of next year in New York. The hearing that could confirm this should be held on March 7th.
UNDERSTAND
- what is the “chapter 11” – is the chapter of the US Bankruptcy Law that deals with the financial restructuring of companies, a mechanism equivalent to Brazilian judicial recovery. The process allows companies to recover their financial situation, including debt renegotiation, while continuing to operate normally with US judicial oversight and approval. The mechanism has been used successfully by many international airlines, including Latam, United Airlines, Delta, Aeroméxico and Avianca Colombia.
