SAO PAULO (Reuters) – At least two Brazilian airlines and aircraft makers Embraer SA (EMBR3.SA) has hired an investment bank to assist talks with the country’s development bank BNDES for government support, said a source familiar with the matter.
FILE PHOTOS: Brazilian aircraft maker logo Embraer SA is seen at the company’s headquarters in Sao Jose dos Campos, Brazil February 28, 2018. REUTERS / Roosevelt Cassio
Embraer has recruited Itau BBA, the investment banking unit at Itau Unibanco Holding SA (ITUB4.SA), said two sources.
Embraer seeks credit lines between $ 1 billion and $ 1.5 billion after an agreement with Boeing Co. (BANNED) fell through.
Brazilian newspaper O Estado de S. Paulo reported earlier on Wednesday that Embraer employed Itau BBA.
Embraer and BNDES did not immediately respond to requests for comment.
Itau BBA also advises the airline Azul SA (AZUL.N) about negotiations with BNDES, two people who were aware of the problem said. Azul confirmed the recruitment of Itau BBA, saying it was suggested by BNDES.
Azul previously hired a restructuring specialist to speak with his creditors, including banks, suppliers and lessors of his aircraft. All payments are deferred. Restructuring Boutique Galeazzi & Associados leads the restructuring work at Azul.
Latam Airlines Group SA based in Santiago (LTM.SN) has maintained investment bank Banco BTG Pactual SA (BPAC3.SA) as an advisor in talks with BNDES, two sources added, mainly focusing on discussions about the debt conversion equation.
Latam Airlines confirmed the recruitment of BTG Pactual.
BNDES is expected to complete negotiations with airlines and Embraer this month for a rescue package that may reach $ 2.5 billion.
Most will likely be provided by BNDES, because private lenders have refused to provide loans to airlines, an industry where their current exposure is small, said two sources.
BNDES initially considered providing loans to airlines equivalent to half of the amount they needed, which was around $ 2 billion, with the remainder provided by Brazil’s biggest lenders, such as Banco Bradesco SA (BBDC4.SA), Itau Unibanco Holding SA (ITUB4.SA) and Banco Santander Brasil SA (SANB3.SA). The bank, however, rejected the plan and all parties tried to reach an agreement.
BNDES support packages for airlines will mix credit lines with conversion instruments that can provide bank shares in the company.
Reporting by Tatiana Bautzer and Carolina Mandl in Sao Paulo; Editing by Lisa Shumaker and Matthew Lewis
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