By Sara Rosenberg
New York, March 30 - Air Canada parent ACE Aviation Holdings Inc. sold an upsized C$300 million offering of 30-year convertible senior notes at par to yield 4.25% with a 30% initial conversion premium.
The deal, priced after the close Tuesday, was upsized from C$250 million.
The Rule 144A deal priced at the low end of yield guidance, which was 4.25% to 4.75%, and came at a more aggressive premium than expected since guidance was only in the 22.5% to 27.5% range.
RBC Dominion Securities Inc., Merrill Lynch Canada Inc. and BMO Nesbitt Burns Inc. were joint bookrunners of the deal, which was sold in Canada and the United States. Co-managers were CIBC World Markets Inc., Citigroup Global Markets Canada Inc., Deutsche Bank Securities Ltd., TD Securities Inc. and Genuity Capital Markets.
In addition, ACE Aviation sold 11.35 million class A variable voting shares and class B voting shares at a price of $37 per share for gross proceeds of C$420 million. The stock sale was upsized from C$350 million.
Buyers of the stock in Canada will receive class B voting shares. Buyers in the United States will receive class A variable voting shares.
Proceeds from the convertibles and the shares will be used to refinance the C$540 million credit facility from GE Capital Corp. used as bankruptcy exit financing last September.
Air Canada had also obtained commitments from a bank syndicate led by the Bank of Montreal for a new C$300 million two-year revolving credit facility, subject to the completion of the equity offering.
A 10% greenshoe is available on both offerings.
"We are extremely pleased at the success of the equity and senior notes offerings," said Robert Milton, chairman, president and chief executive officer of ACE Aviation, in a company news release. "This is clearly a reflection that the capital markets share our confidence in the position of the company going forward.
"The new capital will enhance the company's existing cash position and will further strengthen our balance sheet, which is one of the strongest in the industry. Today's announcement is also an indication that the contribution of our employees and other stakeholders to the company's restructuring are paying off. Future bookings for the airline are strong, reflecting ever growing customer response to Air Canada's new business model and product offering."
Terms of the deal are:
| Issuer: | ACE Aviation Holdings Inc.
|
| Issue: | Convertible senior notes
|
| Bookrunner: | RBC, Merrill Lynch and BMO Nesbitt Burns
|
| Co-manager: | CIBC, Citigroup, Deutsche Bank, TD Securities and Genuity Capital Markets
|
| Amount: | C$300 million, upsized from C$250 million
|
| Greenshoe: | 10%
|
| Maturity: | 2035
|
| Coupon: | 4.25%
|
| Price: | Par
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| Yield: | 4.25%
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| Conversion premium: | 30%
|
| Conversion price: | $48.00
|
| Conversion ratio: | 20.8333
|
| Call: | Callable beginning June 6, 2008
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| Put: | In years 5, 10, 15, 20 and 25
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| Price talk: | 4.25% to 4.75%, up 22.5% to 27.5%
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| Pricing date: | March 29, after market close
|
| Settlement date: | April 6
|
| Distribution: | Rule 144A
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