Press Release By Air Canada 255 Views

Air Canada Announces Offering of Shares and Convertible Senior Notes

MONTREAL, May 26, 2020 /CNW Telbec/ - Air Canada (TSX: AC) (the "Company") today announced that it has commenced a marketed public offering of Class A Variable Voting Shares and/or Class B Voting Shares of the Company ("Shares") for gross proceeds of approximately C$500 million (the "Share Offering") and a concurrent marketed private placement of convertible senior unsecured notes ("Convertible Notes") for gross proceeds of approximately US$400 million (the "Convertible Notes Offering" and together with the Share Offering, the "Offerings").

The Company intends to grant the underwriters an option to purchase up to an additional 15% of the Shares in the Share Offering, exercisable in whole or in part at any time until 30 days after closing of the Share Offering and up to an additional 15% of the Convertible Notes in the Convertible Notes Offering, exercisable in whole or in part at any time until 13 days after closing of the Convertible Notes Offering.

The Share Offering will be priced in the context of the market with the price and other final terms to be determined at the time of entering into an underwriting agreement for the Share Offering.

The Convertible Notes will be senior unsecured obligations of the Company and will accrue interest payable semi-annually in arrears and will mature on July 1, 2025, unless earlier repurchased, redeemed or converted. The Convertible Notes will be convertible into cash, Class A Variable Voting Shares and/or Class B Voting Shares of the Company or a combination thereof, at the Company's election. The interest rate, initial conversion rate and other terms of the Convertible Notes will be determined at the time of pricing of the Convertible Notes Offering.

Completion of the Offerings will be subject to various conditions, including the approval of the Toronto Stock Exchange.

The Company intends to use the net proceeds from the Offerings to supplement the Company's working capital and other general corporate purposes. The net proceeds from the Offerings will serve to increase Air Canada's cash position, thereby allowing for additional flexibility both from an operational standpoint and in the implementation of its planned mitigation and recovery measures in response to the COVD-19 pandemic.

TD Securities Inc., J.P. Morgan Securities Canada Inc. and Citigroup Global Markets Canada Inc. are acting as joint active book-running managers for the Share Offering and J.P. Morgan Securities LLC, TD Securities Inc. and Citigroup Global Markets Canada Inc. are acting as joint active book-running managers for the Convertible Notes Offering.

The Shares offered in the Share Offering will be offered by way of a short-form prospectus in all provinces and territories of Canada and may also be offered in the United States to qualified institutional buyers pursuant to Rule 144A of the U.S. Securities Act of 1933 (the "Securities Act").

The Convertible Notes offered in the Convertible Notes Offering will be offered on a private placement basis and will not be offered by way of a prospectus in Canada. The Shares offered in the Share Offering and the Convertible Notes and Class A Variable Voting Shares and/or Class B Voting Shares of the Company issuable upon conversion of the Convertible Notes have not been, and will not be, registered under the Securities Act, or any state securities laws and may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and the rules promulgated thereunder and applicable state securities laws. The Convertible Notes will be offered to accredited investors in Canada and to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act.

This press release does not constitute an offer to sell or a solicitation of an offer to buy the Shares or the Convertible Notes or any other securities and shall not constitute an offer, solicitation or sale in the United States or in any other jurisdiction in which such an offer, solicitation or sale would be unlawful prior to the registration and qualification under the securities laws of such state or jurisdiction. The Convertible Notes Offering may be made only by means of an offering memorandum.

A preliminary short-form prospectus containing important information relating to the Shares has been filed with securities regulatory authorities in each of the provinces and territories of Canada. The preliminary short-form prospectus is subject to completion or amendment. Copies of the preliminary short-form prospectus may be obtained from TD Securities Inc., TD Tower, 9th Floor, 66 Wellington Street West, Toronto, Ontario, M5K 1A2 (e-mail: sdconfirms@td.com) or J.P. Morgan Securities Canada Inc., Suite 4500, TD Bank Tower, 66 Wellington Street West, Toronto, ON M5K 1E7 or by telephone: Canada Sales 416-981-9233. A copy of the preliminary short-form prospectus can also be obtained under Air Canada's corporate profile on SEDAR at www.sedar.com. There will not be any sale or any acceptance of an offer to buy the Shares until a receipt for the final short-form prospectus have been issued.

Class B Voting Shares of Air Canada may only be owned and controlled by Canadians. Any Class B Voting Share owned or controlled by a person who is not a Canadian is automatically converted to a Class A Variable Voting Share. Class A Variable Voting Shares may only be owned or controlled by persons who are not Canadians. Therefore, any Class A Variable Voting Share owned and controlled by a person who is a Canadian is automatically converted to a Class B Voting Share. Purchasers of the Shares who are Canadians will receive Class B Voting Shares. Purchasers of the Shares who are not Canadians will receive Class A Variable Voting Shares. The term "Canadian" is defined under subsection 55(1) of the Canada Transportation Act (Canada), as amended, as "(a) a Canadian citizen or a permanent resident as defined in subsection 2(1) of the Immigration and Refugee Protection Act (Canada), (b) a government in Canada or an agent or mandatary of such a government or (c) a corporation or entity that is incorporated or formed under the laws of Canada or a province, that is controlled in fact by Canadians and of which at least 51% of the voting interests are owned and controlled by Canadians and where (i) no more than 25% of the voting interests are owned directly or indirectly by any single non-Canadian, either individually or in affiliation with another person, and (ii) no more than 25% of the voting interests are owned directly or indirectly by one or more non-Canadians authorized to provide an air service in any jurisdiction, either individually or in affiliation with another person".



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