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Air Canada strengthens financial position with U.S.$2.15 billion senior secured credit facilities

written by Newsdesk | March 22, 2024

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Air Canada has announced the successful closing of U.S.$2.15 1.175 billion term loan B maturing in 2031 and a U.S.$975 million revolving credit facility maturing in 2029.

The proceeds from the term loan, along with U.S.$1.09 2.265 billion term loan B, which was set to mature in 2028.

The revolving credit facility, an upsize and extension of Air Canada’s existing U.S.$600 million revolving credit facility previously maturing in 2025, remains undrawn as of the closing date. Any future borrowings under this facility will be used to fund working capital and other general corporate purposes for Air Canada and its subsidiaries.

Simultaneously, Air Canada has terminated its undrawn C$200 million revolving credit facility that was set to mature in 2026.

The closing of the senior credit facilities has resulted in several key benefits for Air Canada, including:

  1. A significant reduction in outstanding senior secured indebtedness by U.S.$1.09 billion.
  2. A lower interest rate on its term loan B borrowings, set at 250 basis points over SOFR (with no SOFR floor and no spread adjustment).
  3. An increase in available undrawn amounts under the revolving credit facility by U.S.$375 million.

Air Canada’s obligations under the senior credit facilities are senior secured obligations, secured on a first-lien basis, subject to certain permitted liens and exclusions, by collateral comprised of substantially all of Air Canada’s international routes, airport slots, and gate leaseholds.

The successful closing of these senior secured credit facilities demonstrates Air Canada’s ongoing efforts to strengthen its financial position and enhance its liquidity while navigating the challenges faced by the aviation industry.

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