Air Canada (TSX: AC) (the "Company") today announced that it has launched a private offering (the "Senior Secured Notes Offering") of two series of senior secured notes seeking an aggregate principal amount of approximately US$2.75 billion, consisting of US dollar denominated senior secured notes due 2026 (the "US Dollar Notes") and Canadian dollar denominated senior secured notes due 2029 (the "Canadian Dollar Notes" and, together with the US Dollar Notes, the "Notes").
The Notes will be senior secured obligations of the Company, secured on a first-lien basis, subject to certain permitted liens, by certain collateral comprised of substantially all of the Company's international routes, airport slots and gate leaseholds. The interest rates, principal amounts and other terms of the U.S. Dollar Notes and Canadian Dollar Notes will be determined at the time of pricing of the Senior Secured Notes Offering.
The Senior Secured Notes Offering is being made in connection with the refinancing transactions previously disclosed by Air Canada pursuant to which Air Canada is seeking total gross proceeds of approximately US$5.35 billion, which will include the issue and sale of the Notes and the entry into by the Company of its previously announced new senior secured term loan B expected to mature in 2028 (the "Term Loan") and its new senior secured revolving facility expected to mature in 2025 (the "Revolving Facility" and, together with the Term Loan, the "Senior Secured Credit Facilities"). The proceeds of the Notes, together with the proceeds from the Term Loan, are intended to fund (i) the refinancing of the Company's 4.75% senior secured notes due 2023 and 9.00% second lien notes due 2024, (ii) the refinancing of the Company's indebtedness outstanding under the loan agreement dated as of October 6, 2016 and comprised of a syndicated secured US dollar term loan B facility and a syndicated secured US dollar revolving credit facility and (iii) working capital and other general corporate purposes of Air Canada and its subsidiaries. The Revolving Facility is not expected to be drawn at closing, and any future borrowings thereunder are intended to fund working capital and other general corporate purposes of Air Canada and its subsidiaries.
The Notes offered in the Senior Secured Notes Offering will be offered on a private placement basis and will not be offered by way of a prospectus in Canada. The Notes will be offered to accredited investors in Canada. The Notes have not been, and will not be, registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws and may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and the rules promulgated thereunder and applicable state securities laws.
This press release does not constitute an offer to buy or sell or the solicitation of an offer to sell or buy any securities and shall not constitute an offer, solicitation or sale in the United States or in any other jurisdiction in which such an offer, solicitation or sale would be unlawful prior to the registration and qualification under the securities laws of such state or jurisdiction. The Senior Secured Notes Offering may be made only by means of an offering memorandum.
Closing of the Senior Secured Notes Offering is expected to occur in the second or third week of August 2021, subject to market conditions and customary closing conditions.
Citi, JPMorgan Chase Bank, N.A., and TD Securities are acting as joint book-running U.S. dollar notes managers in respect of the US Dollar Notes and TD Securities, Citi and JPMorgan Chase Bank, N.A. are acting as joint book-running Canadian dollar notes managers in respect of the Canadian Dollar Notes.