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Air Canada Announces Early Tender and Consent Solicitation Results

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MONTREAL, Sept. 19, 2013 /PRNewswire/ - Air Canada today announced that holders of US$557.6 million principal amount of its 9.250% Senior Secured Notes due 2015 (the "USD Senior Secured Notes"), C$285.2 million principal amount of its 10.125% Senior Secured Notes due 2015 (the "CAD Senior Secured Notes," and together with the USD Senior Secured Notes, the "Senior Secured Notes"), and US$190.8 million principal amount of its 12.000% Senior Second Lien Notes due 2016 (the "Second Lien Notes," and collectively with the Senior Secured Notes, the "Notes"), had tendered their Notes and delivered related consents on or before 5:00 p.m., New York City time, on September 18, 2013, which was the early tender deadline (the "Early Tender Deadline") for Air Canada's previously announced cash tender offers for any and all of its outstanding Notes.  The principal amount of Senior Secured Notes tendered represents approximately 93.6% of the outstanding principal amount of the Senior Secured Notes, and the principal amount of Second Lien Notes tendered represents approximately 95.4% of the outstanding principal amount of the Second Lien Notes.

The Notes were tendered in connection with three separate offers, one for each series of Notes listed above (each, a "Tender Offer," and collectively, the "Tender Offers"), that are being made pursuant to Air Canada's Offers to Purchase and Consent Solicitations Statement, dated September 5, 2013 (the "Statement"), and related Letters of Transmittal and Consent, each dated September 5, 2013 (collectively with the Statement, the "Offer Materials").  In connection with the Tender Offers, Air Canada also solicited consents (the "Consent Solicitations") to amend the Notes and the respective indentures that govern them to eliminate most of the restrictive covenants and certain events of default (the "Proposed Indenture Amendments") and to release all of the collateral securing the Notes (the "Proposed Collateral Release Amendments" and, together with the Proposed Indenture Amendments, the "Proposed Amendments").

Subject to the satisfaction or waiver of the conditions to the Tender Offers and Consent Solicitations, including the financing condition and general conditions, Air Canada, in its sole discretion, may elect to accept for purchase all Notes that have been validly tendered (and not validly withdrawn) at or before the Early Tender Deadline on an initial settlement date, or may elect not to have an initial settlement date and may instead accept for purchase all validly tendered (and not validly withdrawn) Notes on a final settlement date to occur promptly after the Expiration Time (as defined below).  All Notes tendered as of the Early Tender Deadline (or thereafter) can no longer be withdrawn, nor can the related consents be revoked, except in certain limited circumstances where additional withdrawal rights are required by law.

Holders who validly tendered (and did not validly withdraw) their Notes and validly delivered (and did not validly revoke) their consents on or prior to the Early Tender Deadline are eligible to receive US$1,044.63, C$1,048.57 and US$1,097.50 per US$1,000 or C$1,000 principal amount, as applicable, of USD Senior Secured Notes, CAD Senior Secured Notes and Second Lien Notes, respectively (the "Total Consideration"), if such Notes are accepted for purchase.  The Total Consideration includes an early tender premium of US$30.00 or C$30.00 per US$1,000 or C$1,000 principal amount, as applicable, of Notes.

Based on the consents received, Air Canada and the trustee and collateral trustees under the indentures governing the Notes will enter into a supplemental indenture with respect to each indenture to effect the Proposed Amendments, including the release of all of the collateral securing the Notes as part of the Proposed Collateral Release Amendments.  The supplemental indentures, which will become operative only upon Air Canada's acceptance for payment of the Notes tendered on or before the Early Tender Deadline, will be binding on the holders of Notes not purchased in the Tender Offers.

The Tender Offers and Consent Solicitations remain open and will expire at 11:59 p.m., New York City time, on October 2, 2013, unless extended or earlier terminated (as extended or earlier terminated, the "Expiration Time").  Holders who validly tender their Notes and deliver their consents after the Early Tender Deadline but on or before the Expiration Time will receive US$1,014.63, C$1,018.57 and US$1,067.50 per US$1,000 or C$1,000 principal amount, as applicable, of USD Senior Secured Notes, CAD Senior Secured Notes and Second Lien Notes, respectively (the "Tender Offer Consideration"), if such Notes are accepted for purchase.

Air Canada currently intends to redeem all USD Senior Secured Notes and all CAD Senior Secured Notes that remain outstanding following the consummation of the Tender Offers (in each case representing less than 10% of the original principal amount of the USD Senior Secured Notes and the CAD Senior Secured Notes, as applicable) pursuant to its right to redeem up to 10% of the original principal amount of each series of such Notes at 103% of the principal amount thereof.  Similarly, Air Canada currently intends to redeem any Second Lien Notes that remain outstanding following the consummation of the Tender Offers at a redemption price of 109% of the principal amount thereof.

Payment for Notes validly tendered after the Early Tender Deadline but at or prior to the Expiration Time and accepted for purchase will be made promptly after the Expiration Time.  Holders whose tendered Notes are accepted for purchase also will receive accrued and unpaid interest from the most recent interest payment date for the Notes, to, but not including, the applicable payment date for the Notes in the Tender Offers.

The complete terms and conditions of the Tender Offers and Consent Solicitations are described in the Offer Materials, copies of which may be obtained by contacting Global Bondholder Services Corporation, the Information Agent for the Tender Offers and related Consent Solicitations with respect to the USD Senior Secured Notes and Second Lien Notes, at (866) 470-3800 (U.S. toll-free) or (212) 430-3774, or by contacting CST Phoenix Advisors, the Information Agent for the Offer and related Consent Solicitation with respect to the CAD Senior Secured Notes, at (800) 332-6309 (North America toll-free) or 201-806-2222 (collect calls).  Air Canada has engaged Citigroup Global Markets Inc. to serve as dealer manager and solicitation agent for the Tender Offers and Consent Solicitations.  Questions concerning the Tender Offers and Consent Solicitations should be directed to Citigroup Global Markets Inc. at (800) 558-3745 (toll-free) or (212) 723-6106.

This announcement is not an offer to purchase, a solicitation of an offer to sell or a solicitation of consents with respect to the Notes or any new securities of Air Canada.  The Tender Offers and Consent Solicitations are made solely by means of the Offer Materials.  The Tender Offers and Consent Solicitations are not being made in any jurisdiction in which the making or acceptance thereof would not be in compliance with the securities, "blue sky" or other laws of such jurisdiction.  None of Air Canada, the dealer manager, the information agents, the depositaries, the trustee and the collateral trustees under the indentures governing the Notes or any of their respective affiliates is making any recommendation as to whether or not holders should tender all or any portion of their Notes in the Tender Offers and, if so, as to the amount of Notes to tender.

About Air Canada

Air Canada is Canada's largest domestic and international airline serving more than 175 destinations on five continents.  Canada's flag carrier is among the 20 largest airlines in the world and in 2012 served close to 35 million customers.  Air Canada provides scheduled passenger service directly to 60 Canadian cities, 49 destinations in the United States and 67 cities in Europe, the Middle East, Asia, Australia, the Caribbean, Mexico and South America. Air Canada is a founding member of Star Alliance, the world's most comprehensive air transportation network serving 1,328 destinations in 195 countries.  Air Canada is the only international network carrier in North America to receive a Four-Star ranking according to independent U.K. research firm Skytrax that ranked Air Canada in a worldwide survey of more than 18 million airline passengers as Best Airline in North America in 2013 for the fourth consecutive year.  For more information, please visit: www.aircanada.com.

Caution Regarding Forward-Looking Information

This press release includes forward-looking statements within the meaning of applicable securities laws. Forward-looking statements in this press release may involve, but are not limited to, statements regarding the payment of the Total Consideration and the Tender Offer Consideration, anticipated amendments to the indentures governing the Notes and the release of collateral securing the Notes, Air Canada's intention to redeem any untendered Notes, anticipated refinancing plans and related matters.  Forward-looking statements are identified by the use of terms and phrases such as "preliminary", "anticipate", "believe", "could", "estimate", "expect", "intend", "may", "plan", "predict", "project", "will", "would" and similar terms and phrases, including references to assumptions.  Risks, uncertainties and assumptions that could cause actual results to differ materially from the results indicated in the forward-looking statements include, among other things, the successful completion and composition of any refinancing transaction and the completion of the Tender Offers.

Forward-looking statements, by their nature, are based on assumptions, including those described herein and are subject to important risks and uncertainties.  Forward-looking statements cannot be relied upon due to, amongst other things, changing external events and general uncertainties of the business and the capital markets.  Actual results may differ materially from results indicated in forward-looking statements due to a number of factors, including without limitation, industry, market, credit and economic conditions, the ability to reduce operating costs and secure financing, pension issues, energy prices, employee and labour relations, currency exchange and interest rates, competition, war, terrorist acts, epidemic diseases, environmental factors (including weather systems and other natural phenomena and factors arising from man-made sources), insurance issues and costs, changes in demand due to the seasonal nature of the business, supply issues, changes in laws, regulatory developments or proceedings, pending and future litigation and actions by third parties as well as the factors identified throughout this news release and those identified throughout Air Canada's public disclosure file available at www.sedar.com.  In particular, the Tender Offers and Consent Solicitations are subject to general market and other conditions and there are no assurances that the Tender Offers and Consent Solicitations will be completed or that the terms of the Tender Offers and Consent Solicitations will not be modified.  The forward-looking statements contained in this news release represent Air Canada's expectations as of the date of this news release (or as of the date they are otherwise stated to be made), and are subject to change after such date.  However, Air Canada disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required under applicable securities regulations.

SOURCE Air Canada



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