#1Helicopter Investor Miami 2014 HI Helicopter Investor João Paulo de C. Vianna Servera Veirano Advogados The Rise and Rise of Brazil September 2014#2Helicopter Investor Miami 2014 A. History, Development and Future B. Legal Evolution C. Tax & Legal Clarifications D. New Opportunities HI Helicopter Investor September 2014#3Helicopter Investor Miami 2014 HI Helicopter Investor A. History, Development and Future September 2014#4Helicopter Investor Miami 2014 Why is Brazil Relevant - What is the "Rise and Rise"? . Market that grows 15/20% a year, with a diversified fleet (2013 numbers) HI Helicopter Investor • Corporate Helicopters ➤ São Paulo: larger corporate helicopter market in the world ➤ Aprox. 420 helicopters in the city / 195 helipads / +500 operations/day ➤ Exclusive Air Traffic Control System Air Taxi Companies ➤ VIP Transportation ➤ Oil & Gas Industry (aprox. 200 aircraft 2013) September 2014#5Helicopter Investor Miami 2014 The Oil & Gas Industry Evolution - Reflect on Helicopters Offshore operations • PETROBRÁS as a leading player (85/90% of market share) 1997 Law 9.478 - ➤ New Competitors ➤ International standards 2001 A different industry - ➤ More Aircraft ➤ New Aircraft ➤ Better fleet 2007 Pre-Salt and the operations to come - ➤ Federal Law 12.351/2010 - PETROBRAS as mandatory parter and operator. HI Helicopter Investor September 2014#6• Helicopter Investor Miami 2014 Pre-Salt Layer Operations and the Future Fleet HI Helicopter Investor Today's Fleet (short and mid-range distance – 70/175 miles) - ➤S-76/S-92/ EC225 • Expected New Fleet (mid and long range distance 150/300 miles) ➤ S-76/SUPER MEDIUMS / S-92/ EC225#7Helicopter Investor Miami 2014 HI Helicopter Investor B. Legal Evolution September 2014#8• • Helicopter Investor Miami 2014 Legal Evolution & Tax Benefits Federal Revenue Normative Rulling 285/2003 - Special Regime of Temporary Admission ➤ Suspension of Federal Taxes (IPI proportional) ➤ True/Finance Lease (subject to ICMS/VAT on import) ➤ Operating Lease (including the replacement of parts and equipment) No Withholdings on Lease Payments Article 199 of Federal Law 11.101/2005 - Bankruptcy and Reorganization procedures Normative Rulling 1.361 May 21 2013 HI • Resolution ANAC 293 November 19 2013 Helicopter Investor September 2014#9Helicopter Investor Miami 2014 Basic Financing Structure – Lease - HI Helicopter Investor Guarantee OEM/Seller Sale Lessor True/Finance Lease Guarantor Lessee (Foreign Jurisdiction) Sublease/Operating Agreement Sub-Lessee (Air Taxi Company) Brazilian Customer September 2014#10Helicopter Investor Miami 2014 Basic Financing Structure - Secured Loan/Lease Lender Loan Mortgage and Security Assignment HI Helicopter Investor 2 - Operating Lease Agreement Borrower Seller 1 - True/Finance Lease Security Assignment Lessee (Foreign Jurisdiction) | Operating Sublease Agreement Sub-Lessee (Air Taxi Company) Brazilian Customer September 200114#11Helicopter Investor Miami 2014 HI Helicopter Investor C. Tax & Legal Clarifications September 2014#12Helicopter Investor Miami 2014 Relevant Brazilian Authorities - Scope HI Helicopter Investor • Brazilian Federal Revenue - Customs Department • ➤ Governs the Special Regime of Temporary Admission ➤ Customs procedures until final clearance (Import Declaration / Import Certificate) Brazilian Central Bank ➤ Regulates banking activity ➤ Controls in-and-out remittance of funds - Nature of the payment may lead to tax assessment ➤ ROF + Schedule of Payments Brazilian Aeronautical Registry - RAB ➤ Aircraft registration ➤ Record any and all Aircraft Liens ➤ Issues CofA and CofR ➤ Act as na Entry Point and Issues AEP Codes (CTC) September 2014#13Helicopter Investor Miami 2014 Cape Town Convention HI Helicopter Investor • Brazil filed with UNIDROIT on November 30, 2011 90 days to become effective - March 1, 2012 Presidential Decree – Decree 8008 – May 15 2013 (Published on May 16) - ➤ CTC internally effective - Resolution ANAC 309 – March 18 2014 (Published on March 21) - ➤ Institutes the procedures for the RAB to act as an Authorizing Entry Point From this date IDERAS are subject to registration AEP codes are only issued to Brazilian residents September 2014#14Helicopter Investor Miami 2014 Repossessing the Aircraft & Recovering Money ➤ Lease Agreement / two witnessess NO SELF HELP REMEDIES Notice of breach / notice of termination ➤ Repossession Injunction Debt is enforceable (locating assets may be difficult) HI Repossession is not a remedy available to a Mortgagee under a Brazilian Law Mortgage. Combined with a Security Assignment, Mortgagee may assume Lessor's position and seek repossession under the terms of the Lease ➤ Mortgage is relevant to secure credits in the event of liquidation IDERAS are enforceable to derregister aircraft, but not for repossession Helicopter Investor September 2014#15Helicopter Investor Miami 2014 HI Helicopter Investor D. New Opportunities September 2014#16Helicopter Investor Miami 2014 MROS - Cost of Importing Equipment and Local Content RELEVANT LOCAL MARKET HI Helicopter Investor • TAX EFFECTS & PRINCING ➤ Importation of additional parts and importation of SERVICE (tax issues) • PETROBRAS REQUIREMENT FOR LOCAL CONTENT • SPECIAL DEPOSIT AS AN ALTERNATIVE ► Local storage of parts with no import tax prior to the sale ➤ Replacement of Customer's material/equipment under same tax regime ➤Local SERVICE, when applicable (reduced taxes) ➤ Possible tax benefits for facility constructions September 2014#17Helicopter Investor Miami 2014 HI Helicopter Investor Further questions? João Paulo de C. Vianna Servera Veirano Advogados + 5521 38241357 [email protected] September 2014