GOL–Delta strategic alliance strengthened

GOL Linhas Aéreas Inteligentes, its controlling shareholder and Delta Air Lines have agreed to enter into a series of Strategic Transactions which will see: equity investments in GOL of up to $90 million and up to $56 million to be made by the company’s controlling shareholder, Fundo de Investimento em Participações Volluto (“Volluto”), and Delta, respectively; Delta guaranteeing a term loan to be entered into by GOL with third party lenders of up to $300 million, with the guarantee in favour of such third party lenders secured by a first priority security interest in favour of Delta in common shares of Smiles [frequent flyer programme] held by GOL; and an extension and expansion of GOL’s commercial co-operation arrangements with Delta.

The Strategic Transactions – which are subject to a series of conditions – are intended to allow GOL and Delta to continue to benefit from their strategic partnership and to significantly enhance the financial position and liquidity of GOL.

Volluto has agreed to invest up to $90 million to exercise its preemptive rights to subscribe for approximately 61% of the new shares of GOL in the capital increase, and also to assign to Delta its preemptive rights to subscribe for any shares remaining after the exercise of preemptive rights by all other shareholders.

Delta meanwhile has agreed to exercise its preemptive rights to subscribe for approximately 2.9% of the new shares in the capital increase, and also to exercise the preemptive rights assigned to it by Volluto to subscribe for additional shares remaining after the exercise of preemptive rights by all other shareholders for an aggregate investment of up to $56 million.

All holders of GOL’s preferred shares, except for holders of preferred shares in the form of ADRs, will be entitled to exercise their preemptive rights to subscribe for a portion of the newly issued shares proportionate to their existing shareholdings, pursuant to the by-laws of GOL.

The detailed terms and conditions of the capital increase are expected to be approved by the board of directors of GOL and disclosed on 14 July 2015, including the final amount in Brazilian reais of the capital increase, issuance price, the record date, and the periods and procedures for the exercise of preemptive rights by the shareholders of GOL.

Delta has also agreed to guarantee a term loan to be entered into by GOL with third party lenders of up to $300 million to be arranged by Morgan Stanley Senior Funding. GOL will provide a security interest in common shares of Smiles to Delta to secure any payments made by Delta on behalf of GOL.

GOL and Delta also agreed to extend the term of their existing strategic, long-term commercial co-operation agreements with exclusivity provisions designed to strengthen the co-operation and synergies between the two companies, and to extend their commercial arrangements relating to aircraft maintenance services.

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