Air Canada tenders, seeks consents for dollar, Canadian dollar notes

By Susanna Moon

Chicago, June 14 - Air Canada said it began cash tender offers for its $600 million 9¼% senior secured notes due 2015, C$300 million 10 1/8% senior secured notes due 2015 and $200 million 12% senior second-lien notes due 2016.

For each $1,000 or C$1,000 principal amount, the total purchase price will be $1,050.70 for the 9¼% notes, C$1,055.25 for the 10 1/8% notes and $1,097.20 for the 12% notes, according to a company press release.

The total payment includes an early tender premium of $30.00 or C$30.00 per $1,000 or C$1,000 principal amount of notes tendered by the early tender deadline of 5 p.m. ET on June 27.

Those who tender after the early deadline will receive $1,020.70 for the 9¼% notes, C$1,025.25 for the 10 1/8% notes and $1,067.20 for the 12% notes.

The company also will pay accrued interest to but excluding the payment date, which is expected to be July 3 for notes tendered by the early tender deadline.

The total payment for the senior secured notes "was determined with consideration given to Air Canada's right to redeem" 10% of the original principal balance of each series of notes at 103% of par and Air Canada's right to redeem the balance of the notes at a redemption price, beginning Aug. 1, of 104.625% of par for the dollar senior secured notes and 105.063% of par for the Canadian dollar senior secured notes, the company said.

Air Canada said it plans to redeem any senior secured notes that remain outstanding following the completion of the offers at the Aug. 1 redemption prices. The company also plans to redeem the 12% notes at a redemption price of 109% of par.

The tender offers will end at 11:59 p.m. ET on July 12.

Consent solicitation

Air Canada is also soliciting consents to amend the notes to eliminate most of the restrictive covenants and some events of default contained in the indentures governing the notes and to release all of the collateral securing the notes.

The company must secure consents for at least a majority of each series of notes, voting together as a single class for the senior secured notes, to approve the proposed amendments under the note indentures. And the company must obtain at least 75% of each outstanding series of notes, voting together as a single class for the senior secured notes, to approve the proposed collateral release amendments, the company said.

Holders may not tender their notes without delivering their consents, and they may not deliver consents without tendering their notes.

Tendered notes may be withdrawn prior the early tender deadline.

The offers are part of an expected refinancing of Air Canada's outstanding debt and are subject to a financing condition. The offers are not conditioned on receiving the required consents to amend the notes.

Citigroup Global Markets Inc. (800 558-3745 or 212 723-6106) is the dealer manager and solicitation agent. Global Bondholder Services Corp. (866 794-2200 or 212 430-3774) is the information agent for the U.S. dollar notes. CST Phoenix Advisors (800 332-6309 or collect 201-806-2222) is the information agent for the Canadian dollar notes.

Air Canada is Saint-Laurent, Quebec-based full-service airline.

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