What Gol Linhas Aereas Inteligentes SA (ADR) (NYSE: GOL)’s Debt Restructuring Means


Debt-riddled Gol Linhas Aereas Inteligentes SA (ADR) (NYSE: GOL) is in the process of a restructuring that would see it reduce its debt burden. As part of the debt restructuring, noteholders are expected to take losses ranging between 30% and 70% on the value of their current bonds. Debts amounting to $780 million are being restructured.

What is the restructuring about?

Gol Linhas Aereas Inteligentes SA (ADR) (NYSE:GOL) is embarking on a process whereby it is replacing older notes worth about $780 million with fresh ones with a longer maturity period. The deal also includes cash payment to the bondholders as they take on fresh notes that will not mature as fast as the older ones, thus allowing Gol to reorganize itself and possibly get back on its feet.

The debts to be affected include the 7.50% senior secured bonds that were due in 2017. Holders of the 2017 notes will take a 30% haircut on the face value of their notes as part of the debt restructuring agreement.

Extension of maturities

The other debts to be affected include those that were due to mature in 2020, 2022 and 2023. Holders of those notes will take a loss of 65% on the current value of their securities as they swap them for fresh notes maturing at a later date. Gol Linhas Aereas Inteligentes SA (ADR) (NYSE:GOL) said that the plan calls for the holders of its perpetual bond to take a 70% haircut.

The company said that the debt exchange program is valid until June 1.

What else is in the agreement?

As creditors agree to take losses on their notes, the deal calls for Gol Linhas Aereas Inteligentes SA (ADR) (NYSE: GOL) to halt debt repayments that had been planned for 2016 and 2017. That is to the benefit of Gol because it enables the company to reduce the burden of servicing debts with close maturities.

Additional funding

The restructuring deal also calls for additional funding to Gol Linhas Aereas Inteligentes SA (ADR) (NYSE: GOL) worth about $85 million to enable the company carry on with its operations. Gol’s liabilities totaled about $4.9 billion at the end of December 2015.


Leave A Reply