Air Canada Commences Equity Solicitation

17th Jul 2003

Air Canada announced that it has
commenced the process of soliciting qualified parties to act as equity plan
sponsor in its plan of arrangement to assist in funding its emergence from the
Companies` Creditors Arrangement Act (CCAA) and to provide the necessary
liquidity to execute its business plan. Air Canada`s financial advisor,
Seabury Securities LLC, New York (“Seabury”), has initiated discussions with
financial institutions, investment companies and equity funds that have
expressed interest in being the plan sponsor in Air Canada`s CCAA plan of
arrangement. Citigroup Global Markets Inc. has been engaged to assist Air
Canada and Seabury with respect to an ancillary process involving a minority
investment in Air Canada`s wholly-owned affiliate, Aeroplan Limited
Partnership, the premier loyalty program in Canada.
The Company is targeting to raise approximately CDN$700 million of new
equity investment, which, together with approximately CDN$600 million of debt
financing to be provided by General Electric Capital Aviation Services
(GECAS), would provide the necessary exit financing for Air Canada`s emergence
from CCAA targeted for late this year.
“The restructuring progress to date is significant as we have now
successfully renegotiated contracts with our major labour groups, reached an
omnibus agreement with GECAS, our largest financier, and made substantial
headway in renegotiating other leases,” said Robert Milton, President and
Chief Executive Officer. “We are now ready to actively commence the capital
restructuring, namely the renegotiation of the company`s unsecured debt and
the raising of equity capital to provide a stable financial base for the
airline once it emerges from CCAA.”
Qualifying financial institutions, investment companies and equity funds
that have expressed interest to date will receive information packages and
meet with management over the coming weeks. Other qualified parties interested
in participating in the equity solicitation process may apply to do so by
contacting a representative of Ernst & Young Inc., the Court Appointed Monitor
under Air Canada`s CCAA proceedings as indicated below.
Air Canada expects to file a Plan of Arrangement in the fall.
Contact Information for Expressions of Interest:
Ernst & Young Inc. Greg Coté, Senior Vice President Telephone: (416) 943-3979 E-mail: [email protected]
This discussion contains certain forward-looking statements, which
involve a number of risks and uncertainties. As a result of many factors
including acts or potential acts of terrorism, international conflicts,
government regulations and government mandated restrictions on operations and
pricing, fuel prices, industry restructuring, labour negotiations, the
economic environment in general including foreign exchange and interest rates,
the airline competitive and pricing environment, industry capacity decisions
and new entrants as well as external events, actual results could differ from
expected results and the differences could be material.


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