Brazil’s Azul receives funding proposal with hybrid instrument

By Taylor Fox

New York, Sept. 14 – Azul SA received a funding proposal from the Brazilian Development Bank and a bank syndicate that foresees a public offering of a hybrid financial instrument with the objective of raising at least R$2 billion.

The financial instrument consists of simple debentures and stock warrants with a premium and exercise price to be defined through the offer’s bookbuilding process.

The proposed loan structure also provides that the Brazilian Development Bank is the anchor investor and can subscribe for up to 60% of the offering while the bank syndicate will provide a firm guarantee of up to 10% of the offering. The remaining balance must be raised from qualified investors through a public offering.

The issuance of stock warrants will result in a potential dilution of approximately 15% based on the closing price of Azul's shares on Sept. 11.

Azul operates an airline company in Brazil.

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