New York, January 11, 2026, 09:32 EST — Market closed
Azul S.A.’s sponsored preferred ADRs are being closely watched ahead of Monday after the Brazilian airline released board minutes clarifying the terms for a mandatory debenture conversion linked to its Chapter 11 plan in the U.S. The minutes specify a swap ratio of 1,498,422 preferred shares per debenture, contingent on the publication of a confirmation order. Timing is tied to the completion of a Brazilian share offering and associated subscription warrants. Azul also confirmed that debenture interest will be “forgiven and definitively extinguished” upon settlement, with 908,401 debentures converting into roughly 1.36 trillion preferred shares. 1
Azul has scheduled online shareholder meetings for Jan. 12 to vote on converting all preferred shares into common shares at a 75-to-1 ratio. They also plan to amend bylaws to eliminate references to preferred shares. The preferred shareholders’ meeting kicks off at 11:00 a.m., followed by an extraordinary general meeting at 2:00 p.m. Management framed this conversion as a key element of the Chapter 11 restructuring plan filed in U.S. bankruptcy court.
In U.S. over-the-counter trading, the ADR (AZULQ) ended at $0.064 on Jan. 2, jumping roughly 28% from the day before, according to Nasdaq historical quotes. With the market closed over the weekend, Monday will show how U.S. investors respond to the latest restructuring moves.
A filing this week revealed the magnitude of Azul’s balance-sheet overhaul. The airline’s board signed off on a Brazilian primary offering totaling 723.86 billion new common shares alongside an equal number of preferred shares, aiming to raise roughly 7.44 billion reais. This debt-capitalisation move is part of its broader restructuring plan. Notably, the company clarified that ADR holders won’t have rights to join the local offering.
In São Paulo, preferred shares took a wild ride: they plunged 90.2% on Jan. 8, only to soar 200% the next day, closing at 75 reais, according to Investing.com price data. These extreme swings highlight the challenge investors face in pinning down value amid ongoing changes to the share count and conversion rules.
Debentures are a form of corporate debt, similar to bonds. When a mandatory conversion kicks in, creditors must exchange their debt for equity. This cuts the company’s cash interest payments but expands its equity base, often diluting current shareholders.
Linking the conversion date to the close of a warrant exercise window is exactly the sort of detail that stirs activity in thinly traded stocks. It also leaves investors uncertain about the “final” post-recap share count until everything is settled.
Still, risks remain. Court schedules, settlement processes, and how many shareholders show up can push back or alter the timeline. Plus, a thinly traded OTC ADR might jump suddenly on modest volume.
Shareholder votes on Jan. 12 are the next key event, while Azul plans to release its 4Q25 earnings on Feb. 26. Investors will be watching that report closely for signs on liquidity and operational momentum as the restructuring drags forward. 2
