Air Canada is planning an up to $1.4 billion secured refinancing of roughly $1.1 billion in outstanding debt.
The refinancing is split between a $1 billion senior secured term loan with a six-year maturity, a Canadian dollar (C$) 300 million ($285.1 million) senior secured term loan with a six-year maturity and a $100 million revolving credit facility with a four-year maturity, according to ratings reports.
The proceeds will be used to repay Montreal-based Air Canada's 9.25% senior secured notes due 2015 with $600 million outstanding, 10.125% senior secured notes due 2015 with C$300 million outstanding and 12% senior second lien notes due 2016 with $200 million outstanding, according to Standard & Poor's (S&P).
Slots at London Heathrow, New York LaGuardia and Washington National airports; certain Pacific routes, gates and slots; accounts payable, and certain spare engines and ground equipment will secure the debt.
Fitch Ratings anticipates the new debt to carry "significantly lower interest rates than the outstanding high yield notes", in a research note.
The refinancing is rated BB- by Fitch, B2 by Moody's and B by S&P.
Air Canada launched a debt buyback for the same outstanding notes on 16 June. It is offering debt holders a small premium for the notes through the tender, which closes on 13 July.
The airline declines to comment.