Air Canada has completed its private offering of $200 million of 4.75% corporate bonds due 2023 (the 2016 bonds) and the closing of its previously announced US$1.1 billion new credit facility.
The latter comprises a US$800-million term loan maturing in 2023 and a new, undrawn US$300-million revolving credit facility expiring in 2021. Together with the term loan, the credit facility has an initial interest rate of 275 basis points greater than LIBOR (subject to a LIBOR floor of 75 basis points).
Read: Be careful with these popular sectors
Net proceeds from the sale of the 2016 bonds and from the term loan were about $1.23 billion, which Air Canada applied (along with cash on hand) to redeem all its outstanding bonds due in 2019 and 2020, and to repay its outstanding US$300-million secured term loan.
Read: Challenges for fixed-income investors
“Since the end of the second quarter of 2013, we have reduced the weighted average cost of our overall debt by approximately 150 basis points, to 4.49%,” says Calin Rovinescu, Air Canada president and CEO. “This transaction also extends the maturities of our senior secured debt to 2023.”
Also read: Advise clients before they make loans