AC PROPOSES REFINANCING TRANSACTION
Air Canada has announced that it intends to refinance approximately $1.1 billion principal amount of its outstanding senior notes and, as part of the refinancing, has launched cash tender offers for any and all of its 9.250% Senior Secured Notes due 2015 (the “USD Senior Secured Notes”), 10.125% Senior Secured Notes due 2015 (the “CAD Senior Secured Notes” and together with the USD Senior Secured Notes, the “Senior Secured Notes”), and 12.000% Senior Second Lien Notes due 2016 (the “USD Second Lien Notes”) (collectively, the “Existing Notes”). The refinancing transaction, if completed as currently proposed, will extend the maturity of Air Canada’s long-term debt and lower its costs of financing.
Subject to market and other conditions, Air Canada plans to enter into a new senior secured term loan and revolving credit facility governing US$800 million of indebtedness (the “New Credit Facility”) and commence private offerings of $300 million aggregate principal amount of senior secured notes (the “New Senior Secured Notes”) and US$300 million aggregate principal amount of senior second lien notes (the “New Senior Second Lien Notes” and, together with the New Senior Secured Notes, the “New Senior Notes”). The New Credit Facility is currently expected to include a US$100 million revolving credit facility and a US$700 million term loan. Proceeds from this refinancing transaction will be used to purchase any and all of the Existing Notes that are validly tendered in connection with the cash tender offers and related consent solicitations described below for its Existing Notes and to redeem or repurchase any Existing Notes not purchased in the tender offers. Air Canada intends to use the remaining proceeds, if any, for working capital and general corporate purposes.
The New Credit Facility and the New Senior Notes 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 Credit Facility and the New Senior Secured Notes and on a second lien basis with respect to the New Senior Second Lien Notes), subject to certain permitted liens and exclusions, by 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.
It is anticipated that the New Senior Notes will be offered and sold on a private placement basis to accredited investors in certain provinces of Canada. In the United States, the New Senior Notes will be offered and sold only to qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to certain non-US persons in transactions outside the United States in reliance on Regulation S under the Securities Act. The New Senior Notes will be 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. (http://www.aircanada.com)