Brazil Gol seeks to raise $681 mln in consumer loyalty unit IPO

Mon Apr 8, 2013 7:02am EDT

* Share offering to help prop up Brazil's No. 2 airline

* Pricing to take place on April 25

SAO PAULO, April 8 (Reuters) - Gol Linhas Aéreas Inteligentes SA plans to raise up to 1.35 billion reais ($681 million) in the initial public offering of its Smiles SA customer loyalty unit, Brazil's No. 2 airline said on Monday in a regulatory announcement.

The pricing is scheduled to take place on April 25, Gol said.

The airline plans to sell at least 30.6 million common shares at between 20.70 reais and 25.80 reais each. An additional 13.5 million shares could be offered as part of the transaction, the bank added.

The Smiles IPO could help prop up Gol, which for the past year has struggled with a surge in operating costs, rising debt and an economic slowdown that temporarily weighed down demand for air travel. In recent months, Gol's fortunes have improved after the Brazilian currency gained ground against the dollar, helping tame costs, and economic growth began to gather steam.

Brazil's first loyalty program, Smiles was created by extinct carrier Viação Aérea Riograndense SA about two decades ago. It competes with Multiplus SA in Brazil's frequent flyer and coalition programs market.

Multiplus and Smiles sell points to financial institutions through affinity programs, airlines and retailers, receiving money upfront.

Gol and Smiles hired the investment-banking unit of Credit Suisse Group to manage the transaction, with co-managers including Banco do Brasil SA, Itaú Unibanco Holding SA, Morgan Stanley & Co, Deutsche Bank AG and Banco Santander SA.