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U.S.$400 million of 6.75% senior secured first lien notes due 2019
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C$300 million of 7.625% senior secured first lien notes due 2019
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U.S.$300 million of 8.75% senior secured second lien notes due 2020
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U.S.$400 million senior secured (first lien) credit facility, including
a U.S.$300 million term loan and a U.S.$100 million revolving credit
facility
MONTREAL, Sept. 19, 2013 /CNW Telbec/ - Air Canada announced today 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.$100 million 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 States in
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.
Caution Regarding Forward-Looking Statements
Air Canada's public communications may include forward-looking
statements within the meaning of applicable securities laws.
Forward-looking statements, by their nature, are based on assumptions
and are subject to important risks and uncertainties. Forward-looking
statements cannot be relied upon due to, amongst other things, changing
external events and general uncertainties of the business. Actual
results may differ materially from results indicated in forward-looking
statements due to a number of factors, including without limitation,
industry, market, credit and economic conditions, the ability to reduce
operating costs and secure financing, pension issues, energy prices,
employee and labour relations, currency exchange and interest rates,
competition, war, terrorist acts, epidemic diseases, environmental
factors (including weather systems and other natural phenomena, and
factors arising from man-made sources), insurance issues and costs,
changes in demand due to the seasonal nature of the business, supply
issues, changes in laws, regulatory developments or proceedings,
pending and future litigation and actions by third parties as well as
the factors identified throughout Air Canada's public disclosure file
available at www.sedar.com. In particular, the closing of each proposed offering of New Senior
Notes is subject to the receipt by Air Canada of aggregate proceeds
from borrowings under the term loan under the New Credit Facility and
from the issuance of the New Senior Notes of not less than U.S.$1.2
billion, and each of the proposed offerings of New Senior Notes as well
as the proposed New Credit Facility are subject to general market and
other conditions and there are no assurances that any of the proposed
offerings of New Senior Notes or the proposed New Credit Facility will
be completed or that the terms of the proposed offerings of New Senior
Notes or the proposed New Credit Facility will not be modified. Any
forward-looking statements contained in this news release represent Air
Canada's expectations as of the date of this news release and are
subject to change after such date. However, Air Canada disclaims any
intention or obligation to update or revise any forward-looking
statements whether as a result of new information, future events or
otherwise, except as required under applicable securities regulations.
SOURCE AIR CANADA - CORPORATE - FINANCE