Air Berlin offers new notes in exchange for 11½% notes, 8½% notes

By Angela McDaniels

Tacoma, Wash., April 28 - Air Berlin plc began an exchange offer for its €150 million 11½% fixed-rate notes due 2014 and €200 million 8½% fixed-rate notes due 2015, according to a company filing with the London Stock Exchange.

The company is offering new euro-denominated fixed-rate notes due 2019 and/or Swiss franc-denominated fixed-rate notes due 2019 in exchange for the existing notes.

The exchange offer will expire at 11 a.m. ET on May 6, and the settlement date is expected to be May 9.

On the settlement date, the holders of existing notes accepted by the company for exchange will receive new notes with an aggregate nominal amount (rounded down to the nearest €1,000 or CHF 5,000, respectively) equal to the product of (a) the aggregate nominal amount of the existing notes offered and accepted for exchange and (b) the relevant exchange ratio

The exchange ratio is 1 to 1.0325 for 11½% notes exchanged for new euro notes, 1 to 1.2597 for 11½% notes exchanged for new Swiss franc notes, 1 to 1.0655 for 8½% notes exchanged for new euro notes and 1 to 1.2999 for 8½% notes exchanged for new Swiss franc notes.

Based on the exchange ratios, the maximum principal amount of new notes that could be issued under the exchange offer is the equivalent of about €368 million.

The company said that if a noteholder would be entitled to receive new notes with an aggregate nominal amount that is not an integral multiple of €1,000 or CHF 5,000 (as applicable), it will not be obliged to pay any cash amount or other compensation for the fractional proportion.

In addition, the company will not pay accrued interest on the existing notes.

Noteholders must offer to exchange at least 100 existing notes in the aggregate principal amount of €100,000 in order to participate.

New notes

Concurrently with the exchange offer, Air Berlin will offer the new notes to institutional investors, but these notes will be due 2019 or 2021. These bonds are being arranged by Anoa Capital, and the proceeds will be used for general corporate purposes.

The company said it will issue at least €250 million principal amount, or the equivalent amount in Swiss francs, of new notes through the offering and the exchange offer. The target amount to be sold to institutional investors is at least €150 million.

The interest rates for the new notes will be determined by way of a bookbuilding procedure in the context of the offering to institutional investors. The coupon will be 6% to 6¾% for the new euro notes and 5½% to 6¼% for the new Swiss franc notes. The interest rates will be announced by May 2.

The exchange offer and new notes are part of a larger recapitalization.

Additionally, Etihad Airways PJSC agreed to purchase €300 million of 8% subordinated convertibles to be issued by Air Berlin Finance BV.

Finally, the company extended the maturity of its partially undrawn credit facility provided by its largest shareholder to 2021 from 2016.

The company plans to generate €450 million of cash inflow through the recapitalization.

The dealer managers are ANOA Capital SA (352 2636 4527 or bernd.schmitz@anoacapital.com), Close Brothers Seydler Bank AG (49 (0) 69 920 54 118 or dcm@cbseydler.com) and quirin bank AG (49 69 2475 049 30 or corporate.finance@quirinbank.de). The exchange agent is Lucid Issuer Services Ltd. (44 (0) 20 7704 0880 or airberlin@lucid-is.com).

Air Berlin is a Berlin-based air carrier.

© 2015 Prospect News.
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