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Last updated on April 20, 2014 at 8:28 EDT

Air Canada Launches Tender Offers and Consent Solicitations for its 9.250% Senior Secured Notes due 2015, 10.125% Senior Secured Notes due 2015, and 12.000% Senior Second Lien Notes due 2016

June 14, 2013

MONTREAL, June 14, 2013 /PRNewswire/ – Air Canada today announced that
it has launched cash tender offers for any and all of its 9.250% Senior
Secured Notes due 2015 (the “USD Senior Secured Notes”), 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
12.000% Senior Second Lien Notes due 2016 (the “USD Second Lien Notes”)
(collectively, the “Notes”) for the cash consideration per US$1,000 or
C$1,000 principal amount, as applicable, set forth next to the
corresponding series of Notes in the table below.  These offers consist
of three separate offers, one for each series of Notes listed below
(each, an “Offer,” and collectively, the “Offers”).  In connection with
the Offers, Air Canada is also soliciting 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 contained in the indentures (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”).  The Offers
and the Consent Solicitations are being made pursuant to an Offers to
Purchase and Consent Solicitations Statement, dated June 14, 2013 (the
“Statement”), and related Letters of Transmittal and Consent, each
dated June 14, 2013 (the “Letters of Transmittal” and, collectively
with the Statement, the “Offer Materials”).

Information related to the Notes, the Offers and the Consent
Solicitations is listed in the table below. The Offer Materials more
fully set forth the terms and conditions of the Offers and the Consent
Solicitations.

     ________________________________________________________________________________________
    |           |          |             |              |             | Early  |             |
    |           |  CUSIP   |             |  Outstanding |Tender Offer | Tender |    Total    |
    |Description|(144A/Reg |             |   Principal  |Consideration|Premium |Consideration|
    | of Notes  |    S)    |      ISIN   |     Amount   |     (1)     |  (1)   |   (1)(2)    |
    |___________|__________|_____________|______________|_____________|________|_____________|
    |9.250%     |          |             |              |             |        |             |
    |Senior     |          |             |              |             |        |             |
    |Secured    |          |             |              |             |        |             |
    |Notes due  |008911AK5/|USC01026AV28/|              |             |        |             |
    |2015       |C01026AV2 |US008911AK56 |US$600,000,000|US$1,020.70  |US$30.00|US$1,050.70  |
    |___________|__________|_____________|______________|_____________|________|_____________|
    |10.125%    |          |             |              |             |        |             |
    |Senior     |          |             |              |             |        |             |
    |Secured    |          |             |              |             |        |             |
    |Notes due  |008911AM1/|CA008911AM15/|              |             |        |             |
    |2015       |008911AN9 |CA008911AN97 |C$300,000,000 |C$1,025.25   |C$30.00 |C$1,055.25   |
    |___________|__________|_____________|______________|_____________|________|_____________|
    |12.000%    |          |             |              |             |        |             |
    |Senior     |          |             |              |             |        |             |
    |Second     |          |             |              |             |        |             |
    |Lien Notes |008911AP4/|USC01026AW01/|              |             |        |             |
    |due 2016   |C01026AW0 |US008911AP44 |US$200,000,000|US$1,067.20  |US$30.00|US$1,097.20  |
    |___________|__________|_____________|______________|_____________|________|_____________|

         Per US$1,000 principal amount of USD Senior Secured Notes and USD
    (1)  Second Lien Notes or C$1,000 principal amount of CAD Senior
         Secured Notes, as applicable.

    (2)  Includes the Early Tender Premium.

Holders who validly tender (and do not validly withdraw) their Notes and
validly deliver (and do not validly revoke) their consents on or prior
to 5:00 p.m., New York City time, on June 27, 2013, unless extended or
earlier terminated (the “Early Tender Deadline”), will be eligible to
receive US$1,050.70, C$1,055.25 and US$1,097.20 per US$1,000 or C$1,000
principal amount, as applicable, of USD Senior Secured Notes, CAD
Senior Secured Notes and USD Second Lien Notes, respectively (the
“Total Consideration”), if such Notes are accepted for purchase.  The
Total Consideration includes an early tender payment of US$30.00 or
C$30.00 per US$1,000 or C$1,000 principal amount, as applicable, of
Notes.

As described more fully in the Statement, the Total Consideration with
respect to the Senior Secured Notes was determined with consideration
given to Air Canada’s right to redeem 10% of the original principal
balance of each series of such Notes at 103% of the principal amount
thereof (a “10% Redemption”) and Air Canada’s right to redeem the
balance of such Notes at a redemption price of, beginning August 1,
2013, 104.625% of the principal amount thereof in the case of the USD
Senior Secured Notes and 105.063% of the principal amount thereof in
the case of the CAD Senior Secured Notes (a “Senior Secured Notes Early
Redemption”).  Air Canada currently intends to redeem any Senior
Secured Notes that remain outstanding following the consummation of the
Offers as part of an exercise of its satisfaction and discharge rights
under the indenture governing the Senior Secured Notes pursuant to a
10% Redemption, with any remaining outstanding balance of such Notes to
be redeemed pursuant to a Senior Secured Notes Early Redemption at the
applicable August 1, 2013 redemption prices.  Similarly, Air Canada
intends to redeem any USD Second Lien Notes that remain outstanding
following the consummation of the Offers as part of an exercise of its
satisfaction and discharge rights under the indenture governing the USD
Second Lien Notes at a redemption price of 109% of the principal amount
thereof.

The Offers and Consent Solicitations will expire at 11:59 p.m., New York
City time, on July 12, 2013, unless extended or earlier terminated (as
extended or earlier terminated, the “Expiration Time”).

Holders who validly tender (and do not validly withdraw) their Notes and
deliver (and do not validly revoke) their consents after the Early
Tender Deadline but on or before the Expiration Time will receive
US$1,020.70, C$1,025.25 and US$1,067.20 per US$1,000 or C$1,000
principal amount, as applicable, of USD Senior Secured Notes, CAD
Senior Secured Notes and USD Second Lien Notes, respectively (the
“Tender Offer Consideration”), if such Notes are accepted for purchase.

Upon the terms and conditions described in the Offer Materials, payment
for Notes accepted for purchase will be made (a) with respect to Notes
validly tendered and not validly withdrawn at or prior to the Early
Tender Deadline, on any date, at the Company’s sole option, between the
Early Tender Deadline and the Expiration Time (which payment date is
currently expected to be July 3, 2013), and (b) with respect to Notes
validly tendered after the Early Tender Deadline but at or prior the
Expiration Time, 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 Offers.

The Offers and Consent Solicitations are part of an anticipated
refinancing of Air Canada’s outstanding indebtedness and are subject to
the satisfaction or waiver of certain conditions, including a financing
condition and general conditions. The Offers are not conditioned upon receipt of the requisite consents
with respect to the Proposed Amendments.
With respect to each Offer and Consent Solicitation, if any conditions
to such Offer and Consent Solicitation are not satisfied, Air Canada is
not obligated to accept for payment, purchase or pay for, and may delay
the acceptance for payment of, any tendered Notes in respect of such
Offer and Consent Solicitation and may even terminate or withdraw the
Offer and Consent Solicitation.

Consents in respect of at least a majority in aggregate principal amount
of the outstanding USD Senior Secured Notes and CAD Senior Secured
Notes (voting together as a single class) are required to approve the
Proposed Indenture Amendments under the indenture governing the Senior
Secured Notes, and consents in respect of at least a majority in
aggregate principal amount of the outstanding USD Second Lien Notes are
required to approve the Proposed Indenture Amendments under the
indenture governing the USD Second Lien Notes.  Consents in respect of
at least 75% in aggregate principal amount of the outstanding USD
Senior Secured Notes and CAD Senior Secured Notes (voting together as a
single class) are required to approve the Proposed Collateral Release
Amendments under the indenture governing the Senior Secured Notes, and
consents in respect of at least 75% in aggregate principal amount of
the outstanding USD Second Lien Notes are required to approve the
Proposed Collateral Release Amendments under the indenture governing
the USD Second Lien Notes.

Holders may not tender their Notes without delivering their consents
pursuant to the Consent Solicitations and may not deliver consents
without tendering their Notes pursuant to the Offers; and holders are
not permitted to validly revoke a consent without validly withdrawing
the previously tendered Notes to which the consent relates.  Notes
tendered can only be withdrawn, and related consents revoked, before
5:00 p.m., New York City time, on June 27, 2013, unless extended or
earlier terminated, except in certain limited circumstances where
additional withdrawal rights are required by law.

The complete terms and conditions of the 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 Offers and related Consent Solicitations with
respect to the USD Senior Secured Notes and USD Second Lien Notes, at
(866) 794-2200 (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 Offers and Consent
Solicitations.  Questions concerning the 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.  The Offers and Consent Solicitations are made
solely by means of the Offer Materials.  The 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 Offers or deliver their consents to the
Proposed Amendments 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 the 15th largest commercial airline in the world and in 2012
served close to 35 million customers.  Air Canada provides scheduled
passenger service directly to 59 Canadian cities, 53 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 1,329 destinations in 194 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 International Airline in North
America in 2012 for the third 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, the completion of the Offers and the receipt
of consents sufficient to approve the Proposed Indenture Amendments and
Proposed Collateral Release Amendments.

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 proposed Offers and Consent
Solicitations are subject to general market and other conditions and
there are no assurances that the proposed Offers and Consent
Solicitations will be completed or that the terms of the 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


Source: PR Newswire