| SAO PAULO
SAO PAULO Brazil's securities watchdog suspended the initial public offering of Azul SA hours ahead of pricing on Thursday, saying the airline gave some investors information that was not included in the transaction's official documentation.
In a statement, the watchdog known as CVM said the suspension would be in effect for up to 30 days. The decision was due to the repeated disclosure of news stories gauging investor demand for the IPO in recent days, as well as the release of a video in which executives gave projections not present in the official prospectus, the statement said.
Azul, which has called off plans to go public on three previous occasions, declined to comment.
The situation underscores how the CVM has recently toughened oversight of domestic debt and equity offerings as companies are returning to capital markets after a three-year drought. The decision could be reversed if Azul "fully corrects the flaws" that led to the IPO's suspension, the statement said.
JetBlue Airways Corp (JBLU.O) founder David Neeleman started Azul in 2008, initially focusing on flights inside Brazil. The company sought to raise up to $550 million from the offering that was taking place simultaneously in Brazil and the United States.
The video, which began to circulate on social media earlier in the day, showed estimates of projected gains in Azul's investment in TAP Transportes Aéreos Portugueses SA [TAPA.UL], a Portuguese carrier it bought in recent years. According to the CVM, the data failed to make it into the official prospectus.
According to three people familiar with the IPO, investor demand was building up satisfactorily on the road to pricing, with Brazil-based investors ready to place bids worth 3.5 times the amount of Azul preferred shares on offer, at the middle of the 19-reais-to-23 reais suggested tag.
The U.S. portion of the Azul deal, which could represent two-thirds of the offering, saw demand rising as much as seven times supply at the mid-point of the suggested range, said one of the people. Azul sought to price its American depositary shares between $18.02 and $21.81.
The investment banking units of Citigroup Inc (C.N), Deutsche Bank AG and Itaú Unibanco Holding SA (ITUB4.SA) were hired to underwrite the offering.
The stock was expected to begin trading on Friday under the symbols AZUL4 in São Paulo and AZUL in New York.
(Additional reporting by Brad Haynes in São Paulo and Lauren Hirsch in New York; Editing by James Dalgleish)