Air Canada talks $400 million five-year convertible notes to yield 4.5%-5%, up 25%-30%

By Abigail W. Adams

Portland, Me., May 26 – Air Canada plans to price $400 million of five-year convertible notes after the market close on Wednesday with price talk for a coupon of 4.5% to 5% and an initial conversion premium of 25% to 30%, according to a market source.

J.P. Morgan Securities LLC, TD Securities Inc. and Citigroup Global Markets Canada Inc. are joint bookrunners for the Rule 144A offering, which carries a greenshoe of $60 million.

The notes are non-callable. There is dividend and takeover protection.

The notes will be settled in cash, class A and/or class B shares, or a combination of both at the company’s option, according to a press release.

Concurrently with the convertible notes offering, the company plans to price a secondary offering of C$500 million class A and/or class B shares.

The secondary offering carries a greenshoe of C$75 million.

Proceeds from the concurrent offerings will be used for working capital and general corporate purposes.

Air Canada is a Montreal-based airline.

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