Maples Group Advises Azul on US$2.25 Billion Restructuring

Maples and Calder, the Maples Group's law firm, is pleased to have advised Brazilian airline, Azul S.A ("Azul"), and its Cayman Islands subsidiaries, Azul IP Cayman Ltd. and Azul IP Cayman Holdco Ltd., on the Cayman Islands legal aspects of Azul's comprehensive US$2.25 billion restructuring.

The innovative and highly complex transaction included, among other features:

• exchange offers and consent solicitations, pursuant to which Azul offered to exchange a total of US$1 billion of 5.875% Senior Notes due 2024 and 7.250% Senior Notes due 2026 on a par-for-par basis for 11.500% Senior Secured Second Out Notes due 2029 and 10.875% Senior Secured Second Out Notes due 2030, respectively, which transactions included support from an ad-hoc group of bondholders and resulted in an overall exchange offer acceptance rate of 86%;
• the issuance of US$800 million of 11.930% Senior Secured First Out Notes due 2028;
• the restructuring of approximately US$350 million of convertible debentures;
• the establishment of two separate shared collateral packages: and
• intercreditor and security sharing arrangements that established a two-tiered structure for each of the shared collateral packages.

The new notes issued as part of the transaction were guaranteed by Azul IP Cayman Ltd. and Azul IP Cayman Holdco Ltd., among others, which own the intellectual property in the collateral packages through a bankruptcy-remote structure.

A multi-disciplinary team of lawyers based in the firm's Cayman Islands office advised Azul on the transaction, led by Finance Partner and Co-Head of Asset Finance, Jonathon Meloy and Finance Partner, Anthony Philp, along with Corporate Partner Finn O'Hegarty, Restructuring Partner Nick Herrod, Regulatory Partner Patrick Head, and Associates Jonathan Brown, Sorcha O'Keefe and Chris Carroll. The team worked closely alongside Shearman & Sterling, who acted as counsel to Azul. 

Jonathon Meloy commented that "We are delighted to have assisted on another significant airline financing collateralised by intellectual property assets. This was an innovative and highly complex transaction. It involved multiple stakeholders, jurisdictions and areas of law, and required advice from our team of specialists in aviation finance, regulatory and restructuring. It was our pleasure to support Azul and we congratulate all deal parties on a successful closing."   

The Maples Group was recently recognised for its role on nine award-winning Deals of the Year at the Airfinance Journal Awards 2022.