Before judicial recovery, Gol negotiated a loan with government guarantee; operation has been suspended

Before judicial recovery, Gol negotiated a loan with government guarantee; operation has been suspended
Before judicial recovery, Gol negotiated a loan with government guarantee; operation has been suspended
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BRASÍLIA – One month before filing the application for judicial recovery in the United States, in December 2023, the Goal negotiated a US$200 million loan with the Brazilian government as guarantor.

The company obtained credit insurance granted by the Export Financing and Guarantee Committee (Cofig), which is under the umbrella of the Ministry of Development, Industry, Commerce and Services (Mdic).

With this insurance, which works as a guarantee, the company intended to take out a loan from the Japanese bank Nomura, with a payment horizon of three years. In case of default, the guarantor would be the Brazilian Treasury, which bears the cost of unsuccessful official credit insurance operations.

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Gol, however, has not yet completed all the steps to finalize the insurance contract and, after the request for judicial recovery in the USA announced last week, the endorsement ended up being suspended by the government for a new evaluation, according to the Mdic.

When contacted, Gol stated that “it does not comment on the status of the negotiations as they refer to private and confidential discussions that involve only the parties”.

Gol aircraft takes off at Santos Dumont airport (RJ)

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The resources would be used by Gol to maintain turbines and aircraft engines at the GE factory in Brazil. The operation is entirely internal and, even so, it used as a guarantee an instrument that was originally created to provide security to exporters in the event of default abroad, the Export Guarantee Fund (FGE).

In 2009, during the Lula 2 government, a legal change allowed airlines to request government credit insurance backed by the FGE also for domestic operations. Since then, no operations had been carried out until December. In addition to Gol, Azul also requested – and received – government approval to borrow US$201 million from Citibank in December.

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The movement coincides with the crisis in the sector and the government’s attempt to create a plan assistance to airlines. At this moment, Lula’s assistants are discussing alternatives on how to provide guarantees to companies so that they can access BNDES loans using another guarantee fund, Fnac (National Civil Aviation Fund).

To do so, it is necessary to change the law that governs the fund. A bill with this content gained urgency in the Chamber in November, thanks to the request of the leader of the Republicans, Hugo Motta (‘PB), who is from the same party as the Minister of Ports and Airports, Silvio Costa Filho.

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With debts exceeding assets, neither Gol nor Azul have been able to access credit lines in the private market. As shown by the Estadão, BNDES was called upon to help companies and could offer, as long as it was with guarantees and at market ratesemergency credit to finance the working capital of these companies.

Even with difficulties at the end of the year, Gol passed the first stage of government approval, obtaining the Guarantee Promise through Cofig. To proceed to the next stage, which is the issuance of the Credit Insurance Coverage Certificate, it was necessary for both Nomura and Gol banks to present details of the operation, with the assessed risks and values. With the financing then contracted, the company would have to pay for the official insurance policy (premium).

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One of the reasons alleged by sources heard by the Estadão The reason why Gol did not advance to the second phase was that the airline did not pay the insurance premium to the Union.

The value in premiums, in theory, irrigates the FGE, which acts as a cushion in the event of default in these operations. But the fund is only accounting, that is, it has no cash resources, and if there is a need for disbursements to cover defaults, it is necessary to appeal to the National Treasury.

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This is what happened when Brazilian construction companies stopped being paid for works they carried out in countries like Venezuela and Cuba. The financing bank in this case was BNDES, which activated the official insurance and was compensated by the FGE, whose resources are still paid by the Treasury to this day.

Since the Michel Temer administration (2016-2018), the government has been discussing ways to transform the FGE into a financial fund, with cash resources coming from premiums paid by insured companies. But the change did not get off the ground, as it would require an initial contribution of around US$1.2 billion from the Treasury.

The risk analysis of Gol and Azul in granting credit insurance was carried out by ABGF (Brazilian Guarantee Fund and Guarantee Management Agency).

When contacted, the state-owned company claimed that the information is confidential as it involves commercial issues of companies and financiers, but that the analysis followed “criteria set out in the Aircraft Sector Understanding (ASU) in which Brazil has participated since July 2007, within the scope of the OECD”.

The article is in Portuguese

Tags: judicial recovery Gol negotiated loan government guarantee operation suspended

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