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(Add the results of the vote of the creditors)
By Marcelo Rochabrun
SAO PAULO, April 5 (Reuters) – Creditors led by hedge fund Elliott Management on Friday approved a plan to restructure bankrupt airline Avianca Brasil, just hours after the country's antitrust regulator announced in advance that 39 it could violate the rules of competition.
The regulatory body, known as CADE, said Friday morning that it could block the plan, which, Avianca Brasil hopes, would raise some $ 210 million. The carrier filed for bankruptcy protection in December.
CADE's warning means that creditors' approval will not bring short-term relief to Avianca Brasil, as the regulator itself has stated that its review of the deal could last about eight months. Meanwhile, the cash-strapped carrier should operate with its own funds or get into more debt.
The plan was changed Friday night at a meeting of creditors, although new details were not immediately available.
Under the plan tabled by Avianca Brasil this week, Gol Linhas Aereas Inteligentes SA and LATAM Airlines Group would purchase Avianca Brasil airport rights, known as slots, from three busy terminals. Gol and LATAM already control more than two thirds of the slots at each of these three airports, including two in Sao Paulo and one in Rio de Janeiro.
The plan would raise much-needed funds, but is high-risk, said the lawyers, as the carrier could remain on hold for a long time without access to new money injections.
If Avianca Brasil fails as a company before getting CADE approval, then it will be too late and there will be no slots at the airports.
Avianca Brasil has fallen behind on its payroll obligations in March and has been fighting for months against the backers of aircraft trying to regain possession of parts of its fleet.
The carrier will not receive any money until the CADE gives the go-ahead to the transaction, said Antitrust lawyer Tatiana Lins Cruz during a meeting Thursday. .
A person familiar with LATAM's thinking said the airlines were hoping that CADE would approve the agreements, as they only resulted in a modest increase in their presence at Brazil's busiest airports.
AZUL SIDE
Avianca Brasil's project was a setback for rival Azul SA, which ranks third among Brazil's largest airlines and has only a small presence in all three airports. At Sao Paulo's Congonhas National Airport, Gol and LATAM already control 92% of the slots, while Azul only holds 3%.
Azul had reached a preliminary agreement with Avianca Brasil to take over the slots for $ 105 million and had already provided some $ 8 million for the carrier to meet its March payroll.
But this deal was canceled once Gol and LATAM came in, in a surprise surprise announcement on Wednesday.
On Friday, CADE seemed to have a more positive view of Azul's takeover.
"A scenario in which Azul becomes the buyer represents a less important antitrust problem than in a scenario with LATAM or Gol," the regulator said in his report.
The plan could also attract the attention of Brazil's civil aviation regulator, because slots at airports are not intended to be purchased and sold. Azul planned to buy the badets of Avianca Brasil as a single airline, but the new plan would create seven different companies, each holding little more than slots.
"In our opinion, it is unclear whether the Brazilian Civil Aviation Agency (ANAC) will approve this new structure," wrote the badysts of the Brazilian bank Bradesco BBI in a note addressed to customers. (Report by Marcelo Rochabrun, edited by Brad Haynes, Richard Chang and Muralikumar Anantharaman)
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