Continental Airlines, Inc. (NYSE: CAL and CAL.A) today announced that it has priced $250 million of convertible preferred securities of an affiliated special purpose trust, convertible into Continental Class B common stock and maturing in 2030. The securities will pay cash distributions at an annual rate of 6% of their $50 per security liquidation amount, and will be convertible at the initial rate of 0.8333 shares of common stock for each security (equivalent to an initial conversion price of $60 per share of common stock). The Company has granted the initial purchasers a 30-day overallotment option on an additional $37.5 million of the securities on the same terms.
The Company is offering the securities in a private placement to qualified institutional buyers in the United States pursuant to Rule 144A under the Securities Act of 1933.
Continental said it intends to use the net proceeds from the offering to fund a portion of the purchase price for the proposed repurchase by Continental of Class A common stock held by Northwest Airlines. If the Northwest repurchase is not consummated, Continental said it intends to use the net proceeds for general corporate purposes.
The securities offered will not be registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.