Air Canada and the Caisse de dép™t et placement du Québec today announced the completion of a financing package under which Air Canada will issue to the Caisse a $150 million convertible unsecured subordinated debenture maturing in November 2009, subject to stock exchange approval. This debenture is part of a $300 million facility under which Air Canada has the option to issue up to an additional $150 million of debentures.
“We`re very pleased that we`ve reached this important financing agreement with our largest shareholder. This signals their confidence in Air Canada`s plan and in the experience and proven track record of our management team,” stated Air Canada`s President and Chief Executive Officer, Robert A. Milton.
“This new funding immediately increases Air Canada`s liquidity to approximately $1.5 billion. It further strengthens our balance sheet and provides additional flexibility as we implement the Air Canada plan,” added Mr. Milton.
Interest on the debentures will be payable quarterly at a rate of 7.25 percent per year.
The debentures are convertible at the option of the Caisse, prior to maturity, into Air Canada Common Shares (to the maximum limit permitted by law) and the balance into Class A Shares, at a 20 percent premium above the average trading price on the relevant stock exchange over a 30-day period commencing one month following completion of the Issuer Bid.
At maturity, Air Canada will have the right to repay these debentures in cash or by issuing Common Shares or Class A Shares at the option of the Company. After the fourth anniversary following the issuance of the debentures, Air Canada may call all or any portion of the debentures for redemption in accordance with their terms.