Air Canada Announces Conditional Notices of Redemption for All of its Outstanding 6.750% Senior Secured Notes due 2019, 7.625% Senior Secured Notes due 2019 and 8.750% Senior Second Lien Notes due 2020, Subject to Completion of Proposed Refinancing Transaction
MONTREAL, Sept. 6, 2016 /PRNewswire/ - Air Canada today announced that it has issued conditional notices of redemption for all U.S.$400 million of its 6.750% Senior Secured Notes due 2019 (the "U.S. Dollar Notes"), C$300 million of its 7.625% Senior Secured Notes due 2019 (the "Canadian Dollar Notes," and, together with the U.S. Dollar Notes, the "First Lien Notes") and U.S.$300 million of its 8.750% Senior Second Lien Notes due 2020 (the "Second Lien Notes," and, together with the First Lien Notes, the "Notes"). Subject in each case to the satisfaction or waiver of the Conditions (as defined below), the redemption of the Notes is expected to occur on October 6, 2016 or such later date as determined by Air Canada, but not later than November 1, 2016 (the "Redemption Date"). Air Canada is not calling for redemption at this time any of the U.S.$400 million outstanding principal amount of its 7.750% Senior Unsecured Notes due 2021.
Redemption Price for First Lien Notes
Subject to the satisfaction or waiver of the Conditions, Air Canada intends to redeem 10% of the U.S. Dollar Notes and Canadian Dollar Notes at a price equal to 103.000% of the principal amount of such Notes (collectively, the "10% Redemption"), and the remaining U.S. Dollar Notes and Canadian Dollar Notes at a price equal to 103.375% of the principal amount of the U.S. Dollar Notes and 103.813% of the principal amount of the Canadian Dollar Notes, respectively (collectively, the "90% Redemption"). The weighted average redemption price for the U.S. Dollar Notes would be 103.3375%, and for the Canadian Dollar Notes would be 103.7317%. Such redemptions would be made in accordance with the terms of the indenture governing the U.S. Dollar Notes and the Canadian Dollar Notes. The above redemption prices would be paid in each case together with accrued and unpaid interest to, but not including, the Redemption Date.
Redemption Price for Second Lien Notes
Subject to the satisfaction or waiver of the Conditions, Air Canada intends to redeem all of the Second Lien Notes at a price equal to 100% of the principal amount of the Second Lien Notes, plus the applicable premium as of, and accrued and unpaid interest to, but not including, the Redemption Date. Such redemption would be made, and the applicable premium would be determined, in accordance with the terms of the indenture governing the Second Lien Notes.
Refinancing Conditions
Subject to market and other conditions, Air Canada intends to complete refinancing transactions, which transactions, together with cash on hand, are intended to refinance the Company's existing senior secured credit facility and the Notes (collectively, the "Refinancing Transactions"). The redemption of the Notes is subject to and conditioned upon completion by Air Canada of the Refinancing Transactions and Air Canada's deposit with the Trustee of funds from the Refinancing Transactions and cash on hand in an amount sufficient to pay the applicable redemption prices and accrued and unpaid interest in respect of the Notes, and related transaction expenses (collectively, the "Conditions"). Air Canada will determine, in its sole discretion, when and whether the Conditions have been satisfied, and it retains the right (but not the obligation) to waive any of the Conditions, including with respect only to the 10% Redemption, only to the 90% Redemption, or to all redemptions. No assurances are provided that the Conditions will be satisfied or waived or that any of the Notes will be redeemed.
The Refinancing Transactions, if completed as currently contemplated, would extend the maturity of Air Canada long-term debt and lower its costs of financing.
Subject to the satisfaction or waiver of the Conditions, from the Redemption Date forward, the Notes will no longer be outstanding, interest will no longer accrue and holders will have no rights other than the right to receive the applicable redemption prices, without additional accrued interest from and after the Redemption Date, upon surrender of the Notes.
General
The Conditional Notices of Redemption are being delivered by the trustee for the Notes, on behalf of Air Canada, to all registered holders. Payment of the applicable redemption prices will be made only upon presentation and surrender of the Notes to the trustee and paying agent, at the address specified in the applicable Conditional Notice of Redemption. Copies of these notices, related questions and additional information relating to the procedure for redemption may be obtained from Air Canada at 514-422-7849 or [email protected].
This press release shall not constitute an offer to sell any new senior secured debt, including notes or other securities ("New Securities"), or the solicitation of an offer to buy any New Securities, nor shall there be any sale of New Securities, in any state or jurisdiction where such offer, solicitation or sale is not permitted. Any New Securities will not be qualified for sale to the public under applicable Canadian securities laws and, accordingly, any offer and sale of New Securities in Canada will be made on a basis that is exempt from the prospectus requirement of such securities laws. Any New Securities will not be registered under the Securities Act of 1933, as amended (the "Securities Act") or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and state securities laws. This press release is for informational purposes only and does not constitute a notice of redemption, nor an offer to tender for, or purchase, any Notes or any other security. There can be no assurances that the Conditions will be satisfied or waived or that any redemption will occur.
About Air Canada
Air Canada is Canada's largest domestic and international airline serving more than 200 airports on six continents. Canada's flag carrier is among the 20 largest airlines in the world and in 2015 served more than 41 million customers. Air Canada provides scheduled passenger service directly to 64 airports in Canada, 55 in the United States and 87 in Europe, the Middle East, Africa, Asia, Australia, the Caribbean, Mexico, Central America and South America. Air Canada is a founding member of Star Alliance, the world's most comprehensive air transportation network serving 1,330 airports in 192 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. For more information, please visit: www.aircanada.com, follow @AirCanada on Twitter and join Air Canada on Facebook.
CAUTION REGARDING FORWARD-LOOKING INFORMATION
This news release includes forward-looking statements within the meaning of applicable securities laws. Forward-looking statements relate to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable. These statements may involve, but are not limited to, statements regarding Air Canada's intention to complete the redemptions, proposed 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.
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. Actual results may differ materially from results indicated in forward-looking statements due to a number of factors, including without limitation, our ability to successfully achieve or sustain positive net profitability or to realize our initiatives and objectives, our ability to pay our indebtedness, reduce operating costs and secure financing, currency exchange, industry, market, credit, economic and geopolitical conditions, energy prices, competition, our ability to successfully implement strategic initiatives and our dependence on technology, war, terrorist acts, epidemic diseases, casualty losses, employee and labour relations, pension issues, environmental factors (including weather systems and other natural phenomena and factors arising from man-made sources), limitations due to restrictive covenants, insurance issues and costs, changes in demand due to the seasonal nature of the business, dependence on suppliers and third parties, including regional carriers, Aeroplan and the Star Alliance, changes in laws, regulatory developments or proceedings, pending and future litigation and actions by third parties and the ability to attract and retain required personnel, as well as the factors identified in section 17 "Risk Factors" of Air Canada's 2015 MD&A dated February 17, 2016 available at www.sedar.com. In particular, the proposed Refinancing Transactions are subject to general market and other conditions and there are no assurances that the proposed Refinancing Transactions may be completed on terms favorable to Air Canada, or at all. 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 - Corporate - Finance
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