A negative market reaction to the details of a debt restructuring plan caused the shares of GOL Linhas Aéreas Inteligentes to drop about 16% in five days last week. As detailed in a Reuters article, the company announced that shareholders could face a potential dilution of up to 80%.
The statement from August 15th had an even greater impact after Citigroup released a report on the securities of the Brazilian company. Concerns about dilution risk were reinforced by the opinions of Itaú analysts. However, those rights guaranteed to shareholders offer the possibility to maintain their shareholding, as long as the warrants are subscribed.
During the week, GOL announced that the Board approved the issuance of warrants for the subscription of preferred shares. Thus, up to 1,891,497,584 preferred share subscription bonuses are available, allowing the holder to subscribe to a preferred share. However, a separate notice to shareholders revealed a high risk of dilution, depending on the amount of subscribed bonuses.
The issuance aims for the convertible debt transaction of GOL Equity Finance. As part of the process, the Abra Group, GOL’s controlling shareholder, plans to transfer subscription preference rights of warrants to GOL Equity Finance. There will be a minimum subscription of 991,951,681 warrants.
Bondholders will receive guaranteed preference subscription rights and will be able to convert all their warrants into shares, maintaining their stake in the company. The warrants have a price of R$ 5.84 (US$ 1.17) and an exercise price of R$ 5.82 (US$ 1.16).
The issuance is advised by Evercore Group LLC and Apsis Consultoria Empresarial Ltda. Bondholders will have the option to exercise their rights to subscribe to preferred shares between August 18, 2023, and March 2, 2028. The result will be a possible dilution of up to 81.87%, depending on the amount subscribed.
