SAO PAULO – Brazilian no-frills airline GOL Linhas Aereas Inteligentes SA (GOL) will continue to correct weaknesses in its cash position with a large global share issue next month.
Late Tuesday, Brazil’s No. 2 airline and its shareholders said they would sell at least 51.8 million shares through the Brazilian Stock Exchange, or BMFBovespa, which would raise 963.9 million Brazilian reals ($535 million) based on GOL’s closing price Tuesday of BRL18.60.
GOL will offer 34.5 million shares through a primary offer, which will go into the company’s coffers, and 17.3 million shares via a secondary offer, which will be paid to shareholders.
The offer will dilute GOL’s share capital, which caused the stock to fall 2.2% to BRL18.20 in early afternoon trade on Bovespa, while the benchmark Ibovespa index was 0.6% lower.
According to the offer prospectus, the operation will increase capital to approximately BRLL2.57 billion from BRL1.95 billion, based on June 30 data.
GOL said it could offer an extra lot of shares if there is sufficient demand.
“A solid cash position is important to an airline because of volatility in oil prices and demand. This offer largely resolves GOL’s problems on this issue,” said an analyst at Link Investimentos in Sao Paulo.
GOL had a weak cash position at the start of the year, totaling BRL592 billion, due to high oil prices and payments for airplanes. The position slid further to BRL395 million by the end of the first quarter.
But with the share issue, combined with a BRL103 million capitalization and a BRL400 million debenture issue in the second quarter, the company will likely achieve its BRL800 million cash position target for the fourth quarter,
Investors can reserve shares from Oct. 2-7. Trading of the shares is expected to begin Oct. 13, the company said in a statement.
Itau BBA, Morgan Stanley, Bradesco BBI, BB Investimentos and Bank of America Merrill Lynch were hired to coordinate the operation.