Canada's largest airline will issue US$400 million of 6.75% senior secured, first-lien notes, due 2019; C$300 million of 7.625% senior-secured, first-lien notes due 2019; and US$300 million of 8.75% senior-secured, second-lien notes due 2020. Air Canada will sell the senior notes at par and will make a semi-annual interest payment.
Additionally, Air Canada has agreed to terms with lenders on a US$400 million senior-secured credit facility, broken down into a US$300 million term loan that matures in 2019 and a US$100 million revolving credit facility.
The notes and loans will be secured by accounts receivable, real estate interests, spare engines, ground service equipment, airport slots and gate leaseholds and Pacific routes.
The senior notes and credit facility offerings will close on Sept. 26.
The airline said it will use part of the proceeds and borrowed funds to buy all of its existing notes, including US$600 million of 9.25% senior-secured notes due 2015, its C$300 million of 10.125% senior-secured notes due 2015 and its outstanding US$200 million of 12% senior second lien notes due 2016.
The remaining money will go towards working capital and general corporate purposes.
Air Canada shares slipped 2.1% on Friday morning.