Air Canada completes CAD$1.25bn refinancing

Air Canada has completed its previously announced private offering of CAD$200m of 4.75% senior secured first lien notes due 2023 (the “2016 Senior Notes”) and the closing of its previously announced U.S.$1.1bn new senior secured credit facility, comprised of a U.S.$800m term loan maturing in 2023, together with a new, undrawn U.S.$300m revolving credit facility expiring in 2021 (collectively with the term loan, the “2016 Credit Facility”). The 2016 Credit Facility has an initial interest rate of 275 basis points over LIBOR (subject to a LIBOR floor of 75 basis points). Air Canada received aggregate net proceeds of approximately CAD$1.23bn from the sale of the 2016 Senior Notes and from the term loan under the 2016 Credit Facility (in each case, after deduction of the applicable transaction costs, fees and expenses). Air Canada applied the net proceeds, together with approximately CAD$444m of cash on hand, to redeem all of Air Canada’s outstanding senior secured notes due 2019 and 2020, and to repay Air Canada’s outstanding U.S.$300m secured term loan. In conjunction with such repayment and redemption, CAD$61m in premium costs were paid, and a write off of transaction costs and discounts of CAD$21m was recorded, both of which will be reported as an interest charge in 2016. Air Canada’s 7.750% senior unsecured notes due 2021 were not called for redemption and remain outstanding.