IAG’s subsidiary British Airways has exercised its option to redeem all of its outstanding £350 million ($546 million) convertible bonds due 2014.
The 5.80% senior unsecured convertible bonds are guaranteed by IAG.
Bondholders have the option to exchange them for ordinary shares in the company until on 23 September 2013.
If all bondholders exercise their conversion rights in respect of all outstanding bonds, the maximum number of new ordinary shares which would be issued in respect of the conversion would be 184,708,994 new ordinary shares, representing 9.96% of the current share capital IAG.
At 27 August, IAG had issued of a total of 48,124,333 new ordinary shares to cover the conversion requests.
British Airways launched the bonds in July 2009 at a £1.89 conversion price, which represented 37.6% premium over the volume weighted average price of British Airways' ordinary shares. The closing price on 15 August 2013 was £3.09.
The offering is lead-managed by Barclays Capital, Deutsche Bank London Branch, HSBC Bank, Merrill Lynch International and RBS Hoare Govett Limited acting as joint bookrunners and joint lead managers. Calyon, Citigroup Global Markets Limited, Goldman Sachs International, JP Morgan and UBS Investment Bank are acting as co-lead managers.