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.
principal amount of 6.750% senior secured first lien notes due 2019 and
principal amount of 7.625% senior secured first lien notes due 2019 (the "New Senior First Lien Notes") and (ii) U.S.
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
also announced today that it has completed the closing of its previously announced U.S.
new senior secured (first lien) credit facility, comprised of a U.S.
term loan maturing in 2019 and a U.S.
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
, 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
on substantially the same collateral pool. We are pleased with the offerings' reception, which reflects positively on Air
and our continued progress to reduce costs and achieve sustainable profitability."
received, in total, net proceeds of approximately
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
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
New York City
September 18, 2013
), in connection with the previously announced separate cash tender offers commenced by Air Canada on
September 5, 2013
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
, as well as the write off of existing transaction costs and discounts related to the Existing Notes, in the amount of
, will be recorded as an interest charge in the third quarter of 2013. Air
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.