Air Canada adds $400 million six-year notes, hikes deal to $700 million; pricing expected Thursday

By Paul A. Harris

Portland, Ore., Sept. 18 - Air Canada grew its high-yield bond offering to $700 million from $300 million on Wednesday with the addition of a $400 million tranche of six-year senior first-lien notes (expected ratings B2/B+).

The notes are non-callable for three years.

The concurrent term loan was downsized by $400 million, taking it to $300 million from $700 million.

The first-lien notes come in addition to a previously announced $300 million tranche of 6.5-year senior second-lien notes (Caa2/CCC+), callable in three years at par plus 75% of the coupon.

The upsized bond deal is expected to price on Thursday.

J.P. Morgan Securities LLC, Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. LLC and TD Securities are the joint bookrunners for the Rule 144A and Regulation S for life transaction.

The Montreal-based issuer, Canada's largest airline, plans to use the all of the proceeds to fund the tender offer for $600 million of its 9¼% senior notes due 2015, C$300 million 10 1/8% senior secured notes due 2015 and any and all of the 12% senior secured second-lien notes due 2016, with any remaining proceeds for general corporate purposes.

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