Air Canada to raise $260 million in bought-deal offering of units

By The Canadian Press

MONTREAL - Air Canada (TSX: AC-B.TO) said Tuesday it has signed a deal with a syndicate of underwriters to raise $260 million in an equity offering that will be used for working capital and general corporate purposes.

Under the bought deal led by Genuity Capital Markets and TD Securities Inc., Air Canada will issue 160.5 million units at a price of $1.62 per unit.

The underwriters have also been give the chance to purchase up to 24.1 million more units under an over-allotment option which could raise another $39 million.

Each unit will include one class B voting share or one class A variable voting share, plus half of a share purchase warrant with an exercise price of $2.20.

The warrants will expire 36 months after the closing of the offering, but if the 20-day volume weighted average price of the shares is equal to or greater than $4, Air Canada has the right to accelerate the expiry of the warrants.

Air Canada class B shares closed up four cents at $1.84 on the Toronto Stock Exchange, while the class A shares were unchanged at $1.84.

The equity offering Tuesday follows a series of deals in July by the airline to raise $1.02 billion.

Air Canada president Calin Rovinescu said at the time that the July financing plus agreements with unions and Ottawa on the airline's pension plans gave it enough cash to see it through a tough period for the industry.

Among the lenders in July were GE Canada Finance, Export Development Canada, Aeroplan Canada Inc. (TSX: AER.TO), and Air Canada parent ACE Aviation Holdings (TSX: ACE-B.TO).

As part of that deal, Air Canada issued to the lenders warrants for the purchase of Air Canada's class A variable voting shares or class B voting shares representing five per cent of the total issued and outstanding shares.