MONTREAL — Air Canada is hoping to raise more than $1 billion in share and debt offerings to bolster its cash position amid the financial devastation of the COVID-19 pandemic.
The airline says it has launched a public offering for about $500 million worth of Class A and Class B voting shares.
It has also started a private placement of unsecured convertible notes — a debt security that allows the owner to convert it into a shares — for a total of US$400 million, or about C$550 million.
The stock and debt offerings include an over-allotment allowing the underwriters to buy an additional 15 per cent of the shares or convertible notes.
Air Canada says the net proceeds will bolster its cash position and provide it greater “flexibility” to manage the impact of the health crisis.
The airline said on May 4 that it had $6.5 billion in unrestricted liquidity after drawing about $1 billion in March from its revolving credit facilities.
The carrier lost more than $1 billion last quarter and grounded the vast majority of its fleet as travel demand stays at near rock-bottom levels while fixed costs persist, including aircraft leases, insurance and maintenance and hangar fees.
Completion of the offerings will be subject to various conditions, including approval from the Toronto Stock Exchange.
TD Securities Inc., J.P. Morgan Securities Canada Inc. and Citigroup Global Markets Canada Inc. are acting as joint managers for the share offering and J.P. Morgan Securities LLC, TD Securities Inc. and Citigroup Global Markets Canada Inc. are joint managers for the notes offering.
Source: The Canadian Press