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Air Canada announced that it has priced its previously announced private offerings of senior secured first lien notes to be denominated in Canadian dollars and senior secured second lien notes to be denominated in U.S. dollars, as well as an additional private offering of senior secured first lien notes to be denominated in U.S. dollars. Air Canada has entered into purchase agreements with a syndicate of initial purchasers relating to (i) U.S.$400 million of 6.75% senior secured first lien notes due 2019 and C$300 million of 7.625% senior secured first lien notes due 2019 (the “New Senior Secured Notes”) and (ii) U.S.$300 million of 8.75% senior secured second lien notes due 2020 (the “New Senior Secured Second Lien Notes” and, together with the New Senior Secured Notes, the “New Senior Notes”). The New Senior Notes will be sold at par and will provide for interest payable semi-annually. Additionally, Air Canada has received commitments from lenders to provide U.S.$300 million under a new senior secured (first lien) term loan maturing in 2019 and U.S.$100million under a new revolving credit facility (collectively, the “New Credit Facility”).
The above reflects Air Canada’s decision to optimize the structure and pricing of the refinancing through the addition of U.S.$400 million of senior secured first lien notes due 2019 and a corresponding reduction in the amount of the term loan under the New Credit Facility.
Each of the offerings of New Senior Notes as well as the New Credit Facility is expected to close on September 26, 2013, subject to customary closing conditions, the acceptance for payment of the Existing Notes tendered in the Tender Offers (each as defined below) and release of the collateral securing the Existing Notes.
Air Canada intends to use a portion of the net proceeds from the sale of the New Senior Notes, together with borrowings under the term loan under the New Credit Facility, to purchase all of Air Canada’s outstanding U.S.$600 million aggregate principal amount of 9.250% Senior Secured Notes due 2015, its outstanding C$300 million aggregate principal amount of 10.125% Senior Secured Notes due 2015 and its outstanding U.S.$200 million aggregate principal amount of 12.000% Senior Second Lien Notes due 2016 (collectively, the “Existing Notes”) that are validly tendered in connection with the previously announced separate cash tender offers and consent solicitations commenced by Air Canada on September 5, 2013 (the “Tender Offers”) and to redeem or purchase any Existing Notes not purchased in the Tender Offers. Air Canada intends to use the remaining proceeds for working capital and general corporate purposes.
The New Senior Notes and Air Canada’s obligations under the New Credit Facility will be senior secured obligations of Air Canada, to be guaranteed on a senior secured basis by one or more of Air Canada’s subsidiaries, and secured (on a first lien basis with respect to the New Senior Secured Notes and Air Canada’s obligations under the New Credit Facility, and on a second lien basis with respect to the New Senior Secured Second Lien Notes), subject to certain permitted liens and exclusions, by certain accounts receivable, certain real estate interests, certain spare engines, ground service equipment, certain airport slots and gate leaseholds, and certain Pacific routes and the airport slots and gate leaseholds utilized in connection with these Pacific routes.
The New Senior Notes are being offered and sold on a private placement basis to accredited investors in certain provinces of Canada. The New Senior Notes are being offered and sold in the United States only to qualified institutional buyers in reliance on Rule 144A under the U.S. Securities Act of 1933, as amended (the “Securities Act”), and to certain non-U.S. persons in transactions outside the United Statesin reliance on Regulation S under the Securities Act. The New Senior Notes have not been and will not be qualified for sale to the public under applicable Canadian securities laws and, accordingly, any offer and sale of the New Senior Notes in Canada will be made on a basis that is exempt from the prospectus requirement of such securities laws. The New Senior Notes have not been and will not be registered under the Securities Act or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and state securities laws.
This press release shall not constitute an offer to sell the New Senior Notes or the solicitation of an offer to buy the New Senior Notes, nor shall there be any sale of the New Senior Notes in any state or jurisdiction where such offer, solicitation or sale is not permitted. The New Senior Notes are being offered only through a preliminary and final offering memorandum and this press release is not intended to serve as the basis for any investment decision.
