(Corrects interest rate of bond to 8.5 percent from 8.75 percent, paragraph 2 )
SAO PAULO, May 3 (Reuters) - Gol Linhas Aéreas Inteligentes SA plans to propose bondholders take losses of up to 70 percent in some of their bonds as Brazil’s second-largest airline strives to overcome a steep recession and plunging air travel demand.
Under terms of the plan, which was unveiled in a filing late on Tuesday, Gol would exchange up to $780 million in U.S. dollar-denominated unsecured notes with maturities ranging from 2018 to 2023, and a perpetual bond too, for new, 8.5 percent secured notes due in 2022 and 2028.
The plan calls for a so-called haircut, or losses that investors would incur during the restructuring, growing in line with debt maturities. Under such terms, Gol would pay 70 percent of the principal for bonds maturing in 2017, 35 percent for the notes due in 2020, 2022 and 2023, and 30 percent to perpetual bondholders.
Gol is the latest Brazilian company to negotiate a debt restructuring with creditors as Brazil’s harshest recession in decades, rising borrowing costs and accelerating inflation hamper the airline’s ability to repay liabilities.
Gol’s outstanding liabilities, including aircraft leases, reached 17 billion reais (US$4.8 billion) as of December.
Gol and advisor PJT Partners Inc based the proposal on current market prices, Chief Financial Officer Edmar Lopes said in a telephone interview, adding that the airline was also renegotiating loans and plane leases.
“Bank loans will not be subject to any discounts,” Lopes said late on Tuesday.
According to the plan, which is expected to be formally presented to investors on Wednesday, Gol would swap notes maturing in 2017 with bonds due in 2018. Bondholders would earn a cash payout if investors joined the plan before May 17.
The offer would be valid until June 1.
The new debt would be backed by Gol and subsidiary VRG Linhas Aereas SA, giving bondholders priority over other unsecured debt. Gol planned to use some equipment as collateral for the new securities.
$1 = 3.5554 Brazilian reais Reporting by Tatiana Bautzer; Writing by Caroline Stauffer; Editing by Daniel Flynn