This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Air Canada Completes Its $1.4 Billion Refinancing Transaction

MONTREAL, Sept. 26, 2013 /PRNewswire/ - Air Canada announced today that it has completed its previously announced private offerings of senior secured notes, consisting of (i) U.S. $400 million principal amount of 6.750% senior secured first lien notes due 2019 and C$300 million principal amount of 7.625% senior secured first lien notes due 2019 (the "New Senior First Lien Notes") and (ii) U.S. $300 million principal amount of 8.750% senior secured second lien notes due 2020 (the "New Senior Second Lien Notes" and together with the New Senior First Lien Notes, the "New Senior Notes"). Air Canada also announced today that it has completed the closing of its previously announced U.S. $400 million new senior secured (first lien) credit facility, comprised of a U.S. $300 million term loan maturing in 2019 and a U.S. $100 million revolving credit facility (collectively, the "New Credit Facility"). The revolving credit facility was not drawn upon in connection with the closing.

"The successful refinancing of our 2010 notes is another important milestone in achieving our stated priorities: It significantly lowers our cost structure, strengthens our balance sheet and improves our credit profile," said Michael Rousseau, Executive Vice President and Chief Financial Officer. "The effective weighted interest rate decreased approximately 300 basis points, the maturity has been extended four years and the total availability under our new financing has increased by C$300 million on substantially the same collateral pool. We are pleased with the offerings' reception, which reflects positively on Air  Canada and our continued progress to reduce costs and achieve sustainable profitability."

Air Canada received, in total, net proceeds of approximately C$1,300 million from the sale of the New Senior Notes and from term loan borrowings under the New Credit Facility (in each case, after deduction of the applicable transaction costs, fees and expenses). Air Canada applied a portion of such net proceeds and borrowings to purchase today all of Air Canada's outstanding 9.250% Senior Secured Notes due 2015, 10.125% Senior Secured Notes due 2015 and 12.000% Senior Second Lien Notes due 2016 (collectively, the "Existing Notes") that were validly tendered on or before the early tender deadline (which was 5:00 p.m., New York City time, on September 18, 2013), in connection with the previously announced separate cash tender offers commenced by Air Canada on September 5, 2013. Air Canada will use a portion of the remaining net proceeds and borrowings to purchase or redeem any of its Existing Notes not tendered prior to the early tender deadline. In conjunction with the purchase of the Existing Notes, the premium costs paid, in the amount of C$61 million, as well as the write off of existing transaction costs and discounts related to the Existing Notes, in the amount of C$34 million, will be recorded as an interest charge in the third quarter of 2013. Air Canada will use the remaining net proceeds and borrowings for working capital and general corporate purposes.

The New Senior Notes and Air Canada's obligations under the New Credit Facility are senior secured obligations of Air Canada, 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 First Lien Notes and Air Canada's obligations under the New Credit Facility, and on a second lien basis with respect to the New Senior 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 those Pacific routes. The applicable margin with respect to loans under the revolving credit facility under the New Credit Facility is 4.50% with respect to LIBOR loans and banker's acceptances and 3.50% with respect to the Index Rate loans or Canadian Prime Rate loans. The applicable margin with respect to the term loans under the New Credit Facility is 4.50% with respect to LIBOR loans and 3.50% with respect to the Index Rate loans. All such applicable margins are subject to the adjustment and other terms of the New Credit Facility.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,651.86 +294.99 1.70%
S&P 500 2,048.61 +35.72 1.77%
NASDAQ 4,732.3450 +88.0330 1.90%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs