Air Canada has completed
its previously announced private offering of C$200 million of
4.75% senior secured first lien notes due 2023 (the 2016 Senior
Notes) and the closing of its previously announced US$1.1
billion new senior secured credit facility, comprised of a
US$800 million term loan maturing in 2023, together with a new,
undrawn US$300 million revolving credit facility expiring in 2021.
The 2016 Credit Facility has an initial interest rate
of 275 basis points over LIBOR (subject to a LIBOR floor of 75
Air Canada received aggregate net proceeds
of approximately C$1.23 billion from the sale of the 2016 Senior
Notes and from the term loan under the 2016 Credit Facility (in
each case, after deduction of the applicable transaction costs,
fees and expenses).
Air Canada applied the net proceeds, together
with approximately C$444 million of cash on hand, to redeem all of
Air Canada's outstanding senior secured notes due 2019 and 2020,
and to repay Air Canada's outstanding US$300 million secured
In conjunction with such repayment and redemption, C$61
million in premium costs were paid, and a write off of transaction
costs and discounts of $C21 million was recorded, both of which
will be reported as an interest charge in 2016.
7.750% senior unsecured notes due 2021 were not called for
redemption and remain outstanding.
achieved several key objectives and represents a meaningful
improvement to our balance sheet. Since the end of the second
quarter of 2013, we have reduced the weighted average cost of our
overall debt by approximately 150 basis points, to 4.49 per cent.
This transaction also extends the maturities of our senior secured
debt to 2023. We now have even greater flexibility to continue to
execute on our strategic initiatives and create additional value
for shareholders," said Calin Rovinescu, President and Chief
Executive Officer. "We expect to realize annualized interest
expense savings of approximately C$60 million. We have also freed
up collateral with a value of approximately C$650 million,
bringing the total estimated value of Air Canada's unencumbered
assets to approximately C$2 billion. We also added US$90 million
in capacity to our revolving credit facility, up to US$300
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