Second only behind LATAM (LTM) as the biggest airline in Brazil, GOL Linhas Aereas (GOL) filed for bankruptcy in January 2024 after racking up more than $3.8 billion in debt coming out of the pandemic-related travel downturn and waiting for delayed Boeing (BA) plane deliveries.
A reorganization plan that a Brazilian bankruptcy judge approved in December 2024 said the Rio-based airline commonly called just GOL would convert $1.7 billion of debt into equity and raise $1.85 billion of new investor financing.
On May 1, GOL further announced that a group of investors holding 8% senior secured notes set to mature in 2026 had agreed to put $125 million toward getting it out of bankruptcy. The. investor group is referred to by the airline as Ad Hoc Group.
“Combined with the Ad Hoc Group’s commitment, GOL has now secured not less than $1.375 billion of exit debt financing commitments,” the airline said in a statement.
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‘A substantial dilution of currently outstanding shares is expected’
The new funding is another major step toward formally getting GOL out of bankruptcy. As part of the deal reached with the investor coalition, GOL has agreed to grant additional investors outside the Ad Hoc group the right to access up to $100 million in new debt, although without converting it to company shares.
Earlier rumors suggested that airlines like United (UAL) , American Airlines (AAL) , and Lufthansa (DLAKF) were all among those considering putting funds into GOL earlier this year. As the largest low-cost carrier in Brazil, GOL has continued operations flying both within the large South American country and to nearby countries like Argentina, Peru, and Chile.
“GOL reiterates that, under the terms of the plan, it will significantly reduce its indebtedness by converting into equity or extinguishing up to approximately US$1.7 billion of its pre-Chapter 11 funded debt and up to approximately US$850 million of other obligations,” the airline writes. “As such, considering that the conversion will be carried out based on the economic value of GOL’s shares prior to the conversion, in accordance with applicable law, a substantial dilution of GOL’s currently outstanding shares is expected.”
Related: Another low-cost airline files Chapter 11 bankruptcy plan
At the start of April, GOL also reworked its agreement to purchase 92 of Boeing’s Max 737 planes to free up $235 million to be paid to unsecured creditors. A bankruptcy judge in the Southern District of New York gave GOL the go-ahead for the sale.
Can GOL get out of bankruptcy this summer? It’s looking increasingly likely
GOL said that, with the new funds, it sees itself formally emerging from bankruptcy by June 2025, although it has previously breezed past dates set earlier in the year.
GOL Linhas Aéreas is a Brazilian low-cost airline.
Image source: Shutterstock
Other details in the company reorganization plan GOL filed in December include transferring approximately $950 million in new equity, with the possibility of a larger amount in the future, to its parent holding company Abra in exchange for the latter erasing $2.8 billion in debt.
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“With resolution of these issues, the debtors will be well-positioned to begin raising the necessary exit capital required by their business plan and engaging with their other creditor constituencies,” GOL said of the restructuring plan filed last December.
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