Gol bond exchange gets 22% acceptance, banks waive covenant

Gol Linhas Aereas Inteligentes said just 22% of its overseas bondholders agreed to a debt exchange offer that the carrier said was key to keeping it out of bankruptcy. Of the $780m in securities outstanding, only $174.7m were tendered by holders even after the deal was sweetened last month in an effort to lure more participants. The company had said it was aiming for a 95% acceptance rate. “We will continue assessing the market, looking for medium-term alternatives to deal with our debt,” CFO Edmar Lopes said. “The real’s appreciation in the last months and the drop in the Brazil risk perception certainly weighed on the decision of some bondholders.” The results are a blow to Gol, which is suffering from a slump in air travel amid Brazil’s worst recession in a century. The carrier posted a record 4.46b-real ($1.38b) loss last year and has said it needs relief from creditors after burning through 484m reais of cash in Q1. The exchange on dollar-denominated bonds will reduce total debt by $101.2m and use up $13.9m in cash, the company said. “The measures taken by the company will have important short and medium term benefits,” BB Investimentos Analyst Mario Bernardes Junior wrote in a report to clients. The airline had been asking bondholders to accept losses of as much as 55%, with incentives designed to reduce the hit that would be based on the carrier’s performance or if there was a change of control of the company. The original proposal, made in May, would have imposed losses of as much as 70%. Gol said it discussed the deal with more than 150 debt holders in the two months since the offer was made.<br/>