Air Canada plans $1.02 billion in new secured facilities as part of a refinancing to lower its interest expenses.
The facilities would be split between a $720 million term loan B due in 2023 and a $300 million first lien senior secured revolving credit facility, a Moody’s Investors Service report says.
The new debt would replace about $1.23 billion in existing facilities, the rating agency says. These include its $300 million first lien term loan B notes, $400 million 6.75% first lien senior secured notes, C$300 million ($233 million) 7.625% first lien senior secured notes and $300 million 8.75% second lien senior secured notes.
The 6.75% first lien and 7.625% second lien notes mature in 2019 and the 8.75% second lien notes in 2020, according to Air Canada.
The new debt is secured by an asset pool that includes some of Air Canada’s Pacific routes and related gates and slots, and its slots at London Heathrow, New York LaGuardia and Washington National airports, says Moody’s.
Air Canada launched a redemption programme for the roughly $933 million outstanding under its 6.75%, 7.625% and 8.75% notes on 6 September. The airline is offering to pay 103% of the principal for 10% of the outstanding balance and, for the remaining balance, pay 103.375% of the US dollar principal and 103.813% of the Canadian dollar principal.
The average weighted redemption offering is 103.3375% for the US dollar principal and 103.7317% for the Canadian dollar principal.
The redemption and planned refinancing will reduce Air Canada’s interest expense and extend the maturity of the debt, it says.
The redemption will close between 6 October and 1 November pending close of the new facilities.
Moody’s rates the proposed facilities Ba3 with a positive outlook, the rating agency says.
Air Canada had C$6.4 billion in long-term debt and finance lease obligations at the end of June.
Source: Cirium Dashboard
