Air Canada gets needed consents to amend 9¼%, 10 1/8%, 12% notes

By Jennifer Chiou

New York, Sept. 19 - Air Canada announced the early tender results and the receipt of needed consents in its separate cash tender offers for any and all of its $600 million of outstanding 9¼% senior secured notes due 2015, any and all of its C$300 million of outstanding 10 1/8% senior secured notes due 2015 and any and all of its $200 million of 12% senior second-lien notes due 2016.

As previously reported, Air Canada is soliciting consents to amend the respective indentures governing the notes to eliminate most of the restrictive covenants and some events of default and to release all of the collateral securing the notes. It has obtained the necessary consents and will enter into supplemental indentures.

Holders who tendered their notes and deliver their consents by the early tender deadline, 5 p.m. ET on Sept. 18, will be eligible to receive the total consideration, which includes a $30.00 or C$30.00 early tender payment for each $1,000 or C$1,000 principal amount of notes.

As of the early deadline, holders of $557.6 million of the 9¼% notes, C$285.2 million of the 10 1/8% notes and $190.8 million of the 12% notes tendered their holdings and delivered consents.

Air Canada said in a news release that it intends to redeem any remaining notes following the completion of the offers. The redemption price for the 9¼% notes and the 10 1/8% notes will be 103, while the redemption price will be 109 for the 12% notes.

The total consideration is $1,044.63 for the 9¼% notes, C$1,048.57 for the 10 1/8% notes and $1,097.50 for the 12% notes.

Holders tendering after the early deadline will not be eligible to receive the total consideration. The tender offer consideration is $1,014.63 for the 9¼% notes, C$1,018.57 for the 10 1/8% notes and $1,067.50 for the 12% notes.

Holders will also receive accrued interest to the applicable payment date.

The tender offers and consent solicitations will expire at 11:59 p.m. ET on Oct. 2.

The deadline for withdrawing tenders and revoking consents was 5 p.m. ET on Sept. 18.

Holders may not tender their notes without delivering their consents or vice versa, but the offers are not conditioned upon receipt of the needed consents to amend the notes.

To amend the 9¼% and 10 1/8% notes, the company needs consents from holders of a majority in principal amount of the outstanding senior secured notes (voting together as a single class). To amend the 12% notes, the company needs consents from a majority in principal amount of the second-lien notes.

Consents for at least 75% in principal amount of the outstanding 9¼% and 10 1/8% notes (voting together as a single class) are required to approve the proposed collateral release under the indenture governing the senior secured notes, and consents for at least 75% in principal amount of the outstanding 12% notes are required to approve the proposed collateral release under the indenture governing the second-lien notes.

The tender offers and consent solicitations are part of a proposed refinancing of Air Canada's outstanding debt and are subject to a financing condition and other conditions.

Citigroup Global Markets Inc. (800 558-3745 or 212 723-6106) is the dealer manager and solicitation agent for the tender offers and consent solicitations.

Global Bondholder Services Corp. (866 470-3800 or 212 430-3774) is the information agent for the U.S. dollar-denominated notes. CST Phoenix Advisors (800 332-6309 or 201 806-2222) is the information agent for the Canadian dollar-denominated notes.

The airline is based in Montreal. It began the offers on Sept. 5.

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