Latin Lawyer published a story last week about Azul Airlines selling a minority stake to HNA Group, omitting TozziniFreire Advogados as Brazilian counsel to HNA. An updated version of the story follows below.
Shearman & Sterling LLP's New York and São Paulo office and Brazil's Pinheiro Neto Advogados were the law firms enlisted by Brazilian budget carrier Azul Airlines when it sold a minority stake worth 1.7 billion reais (US$450 million) to Chinese conglomerate HNA last week after aborting plans for an IPO this year.
HNA bought a 24 per cent stake in Azul, making it the single biggest shareholder in the carrier and giving it a seat on Azul's board. HNA – a group that includes aviation, banking and vehicle leasing interests – hired Brazilian firm TozziniFreire Advogados. It is also thought to have worked with Sidley Austin LLP, but this was not confirmed before publication.
Azul plans to use the financing boost to strengthen its balance sheet and reduce debts after it was forced to delay IPO plans for a third time earlier this year as a result of Brazil's poor capital market conditions, despite registering for a public offering at the end of 2014. So far this year, no Brazilian companies have carried out IPOs to raise new capital, although shareholders of Brazilian insurance broker Par Corretora sold US$177 million worth of shares publicly in June, but no new cash was raised for the company. The decreasing value of Brazil's real has increased dollar-denominated costs for local airlines, while the country's recession-hit economy is dampening demand for air travel.
The deal marks the second time this year Azul has received Chinese funding, suggesting Chinese interest in Brazil remains intact in spite of a shrinking economy at home. In May, the Industrial and Commercial Bank of China lent the airline US$200 million. Azul's counsel for its deal with HNA is familiar from another sale carried out by the airline this year: in July US carrier United Airlines paid US$100 million for a 5 per cent share in Azul with the help of Brazilian firms Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados and Aidar SBZ Advogados and US firm Sidley Austin LLP. The United Airlines deal saw Azul sign a code-share agreement with the US carrier, as well as a joint loyalty programme.
Brazilian-American businessman David Neeleman founded low-cost airline Azul in 2008. In 2013, Azul became Brazil's third-largest airline after securing antitrust approval to merge with another Brazilian carrier, Trip. The merger saw Azul rely on Sampaio Ferraz Advogados, while Trip hired Souza, Cescon, Barrieu e Flesch - Advogados.
Counsel to Azul Airlines
Shearman & Sterling LLP - Partner Stuart Fleischmann in New York, counsel Jon Kellner and associate Jennifer Lau in São Paulo
Pinheiro Neto Advogados - Partner Álvaro Uliani dos Santos and associates Guilherme Sampaio Monteiro and Roberta Stettinger Demange in São Paulo
Counsel to HNA
TozziniFreire Advogados - Partner Marcio Mello Silva Baptista in New York, and partner Alexei Bonamin and associates Fernanda de Queiroz and Daniela Contreras Bochi in São Paulo
This story was updated to include additional counsel on 3 December