Azul S.A. - Exchange Offer & Consent Solicitation - Launch

Azul Announces Exchange Offers of Certain Existing Notes for New Notes and Solicitations of Consents to Proposed Amendments to the Existing Indentures

13 JUNE 2023

Full announcement including disclaimers and offer restrictions available via Prnewswire (Source: Azul S.A.)

"SÃO PAULO, June 13, 2023 /PRNewswire/ -- Azul S.A., "Azul," (B3: AZUL4, NYSE: AZUL) ("Azul") today announced that its wholly-owned subsidiary Azul Investments LLP (the "Existing Notes Issuer") has commenced two separate offers to Eligible Holders (as defined below) to exchange (such offers, the "Exchange Offers") (i) any and all of the outstanding 5.875% Senior Notes due 2024 issued by the Existing Notes Issuer (the "Existing 2024 Notes") for newly issued 11.500% Senior Secured Second Out Notes due 2029 to be issued by Azul Secured Finance LLP (the "New Notes Issuer") (the "New 2029 Notes"), and (ii) any and all of the outstanding 7.250% Senior Notes due 2026 issued by the Existing Notes Issuer (the "Existing 2026 Notes" and, together with the Existing 2024 Notes, the "Existing Notes") for newly issued 10.875% Senior Secured Second Out Notes due 2030 to be issued by the New Notes Issuer (the "New 2030 Notes," and together with the New 2029 Notes, the "New Notes"), pursuant to the terms and subject to the conditions set forth in the confidential exchange offering memorandum and consent solicitation statement, dated June 13, 2023 in respect of the Exchange Offers and Solicitations (as defined below) (the "Offering Memorandum").

The New Notes will be guaranteed by Azul and its subsidiaries Azul Linhas Aéreas Brasileiras S.A. ("Azul Linhas"), IntelAzul S.A. and ATS Viagens e Turismo Ltda., as well as Azul IP Cayman Holdco Ltd. and Azul IP Cayman Ltd, which will be incorporated prior to the first Settlement Date (together, the "Guarantors"). The New Notes will be secured by certain assets and rights, as described in the Offering Memorandum.

Any capitalized terms used in this press release without definition have the respective meanings assigned to such terms in the Offering Memorandum."

(1) The New Notes Issuer will issue New Notes in the minimum denomination of US$175,000 and integral multiples of US$1.00 in excess thereof. For the avoidance of doubt, no cash will be paid for fractional New Notes not received due to rounding. The Existing Notes Issuer will pay in cash accrued and unpaid interest, if any, on the Existing Notes from the last payment date for the Existing Notes of the relevant series, up to, but not including, the applicable Settlement Date (as defined below). If the Existing Notes Issuer elects to have an Early Settlement Date (as defined below) in respect of Existing Notes of a series, the interest commencement date for the New Notes of the relevant series shall be such Early Settlement Date. Therefore, any such New Notes issued by the New Notes Issuer on the applicable Final Settlement Date (as defined below) will be issued by the New Notes Issuer with accrued and unpaid interest from such Early Settlement Date. Accordingly, the amount of accrued and unpaid interest that has accrued on such New Notes to, but excluding, the applicable Final Settlement Date will be deducted, but not below zero, from the cash payable in respect of accrued and unpaid interest, if any, on the Existing Notes of the relevant series exchanged on the applicable Final Settlement Date.

(2) Eligible Holders who validly tender Existing Notes of a series after the Early Participation Deadline (as defined below) but on or before the Expiration Deadline (as defined below) will not be eligible to receive the Early Exchange Premium for such series validly tendered and not validly withdrawn.

Simultaneously with the Exchange Offers, the Existing Notes Issuer is conducting (i) a solicitation (the "2024 Solicitation") of consents (the "2024 Consents") from Eligible Holders of the Existing 2024 Notes to effect certain proposed amendments (the "2024 Proposed Amendments") to the indenture dated as of October 26, 2017, under which the Existing 2024 Notes were issued (the "2024 Notes Indenture"), and (ii) a solicitation (the "2026 Solicitation" and, together with the 2024 Solicitation, the "Solicitations") of consents (the "2026 Consents" and, together with the 2024 Consents, the "Consents") from Eligible Holders of the Existing 2026 Notes to effect certain proposed amendments (the "2026 Proposed Amendments" and, together with the 2024 Proposed Amendments, the "Proposed Amendments") to the indenture dated as of June 15, 2021, under which the Existing 2026 Notes were issued (the "2026 Notes Indenture" and, together with the 2024 Notes Indenture, the "Existing Notes Indentures"). The Proposed Amendments with respect to each Existing Notes Indenture would, among other things, eliminate substantially all of the restrictive covenants, events of default and related provisions contained in such Existing Notes Indenture. Eligible Holders may not tender their Existing Notes for exchange pursuant to the applicable Exchange Offer without delivering their Consents pursuant to the applicable Solicitation, and Eligible Holders may not deliver their Consents pursuant to the applicable Solicitation without tendering their Existing Notes pursuant to the applicable Exchange Offer. The valid tender of Existing Notes of a series by an Eligible Holder pursuant to the relevant Exchange Offer will be deemed to constitute the giving of a Consent by such Eligible Holder to the Proposed Amendments of the Existing Notes Indenture applicable to such series.

Azul has entered into a Transaction Support Agreement (the "Transaction Support Agreement") dated June 13, 2023, between the New Notes Issuer, the Guarantors and an ad hoc group of holders of Existing Notes (the "Supporting Noteholders"). Subject to the terms and conditions set forth in the Transaction Support Agreement, the Supporting Noteholders have agreed to tender their Existing Notes in the Exchange Offers and deliver Consents to the Proposed Amendments prior to the Early Participation Deadline. The Supporting Noteholders represent 65.5% of the aggregate principal amount of the Existing 2024 Notes and 65.8% of the aggregate principal amount of the Existing 2026 Notes outstanding as of the date of this press release. The consent of Supporting Noteholders suffices to approve the Proposed Amendments in respect of the Existing Notes of each series.

Each Exchange Offer and Solicitation is a separate offer, and each Exchange Offer and Solicitation may be individually amended, extended, terminated or withdrawn without amending, extending, terminating or withdrawing any other Exchange Offer or Solicitation, at any time prior to the Expiration Deadline and for any reason. As described in the Offering Memorandum, the New Notes will constitute Second Priority Secured Obligations and will, pursuant to the Intercreditor Agreement, be secured on a "second out" basis by security interests in the Collateral."

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