Air Canada anticipates pricing of $1.4b debt deal shortly

Washington DC
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Air Canada anticipates getting an idea of the pricing on its nearly $1.4 billion high-yield refinancing by 20 September, says chief financial officer Michael Rousseau.

He expects book building for the deal to be done within “48 hours”, during comments made at CIBC’s 12th Annual Eastern Institutional Investor Conference on 18 September. He calls the deal “opportunistic”.

“The markets are fairly strong,” says Rousseau. “So we took full advantage of them.”

The deal includes a $300 million first lien senior secured term loan, $400 million in first lien senior secured notes and Canadian dollar (C$) $300 million ($292.7 million) in first lien senior secured notes all with a six-year tenor, $300 million in second lien senior secured notes with a 6.5-year tenor and a $100 million first lien senior secured revolving credit facility with a four-year tenor.

Proceeds of the debt will be used to repay the outstanding principal of Air Canada’s $600 million 9.25% senior secured notes due 2015, C$300 million 10.125% senior secured notes due 2015 and $200 million 12% senior second lien notes due 2016.

Separately, holders of the outstanding debt redeemed $555.6 million in principal of the 9.25% notes, C$285.2 million of the 10.125% notes and $190.8 million of the 12% notes tendered their notes by 18 September. This represents about 94% of the outstanding principal.

Holders will receive $1,044.63 per $1,000 of the 9.25% notes, C$1,048.57 for the 10.125% notes and $1,097.50 for the 12% notes, under the early tender offer that Air Canada launched on 6 September.

The tender closes on 2 October.