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Fitch Rates Air Canada's Proposed Sr. Secured Credit Facilities & Notes 'BB/RR1'

CHICAGO--(BUSINESS WIRE)--Fitch Ratings expects to rate Air Canada's (AC) proposed $300 million 1st lien senior secured term loan B, $100 million 1st lien senior secured revolving credit facility, $400 million 1st lien senior secured notes, and C$300 million 1st lien senior secured notes 'BB/RR1'.

This action represents an update to the press release published on Sept. 9, 2013. Whereas Air Canada initially proposed to raise $700 million through the issuance of a 1st lien term loan B, AC now expects to issue the same amount of debt through the combination of a $300 million 1st lien term loan B and $400 million in 1st lien secured notes. The expected ratings for AC's proposed $300 million 2d lien senior secured notes remain 'BB-/RR2'

The new debt will be secured by a priority lien on accounts receivable, certain real estate, spare engines, ground equipment, AC's Pacific route authorities, and slots at LaGuardia, Heathrow, and Washington-Reagan. This represents the same collateral pool that secures AC's existing secured notes, supplemented by 10 additional spare engines.

For more information please refer to the press release titled 'Fitch Rates Air Canada's Prop'd Sr Secured Credit Facils & Notes 'BB/RR1'; 2d Lien Notes 'BB-/RR2', available at www.fitchratings.com.

Fitch expects to assign the following ratings:

Air Canada

--Senior secured term loan B due 2019 'BB'/'RR1';

--Senior secured revolving credit facility 'BB'/'RR1';

--First lien senior secured notes due 2019 'BB'/'RR1';

--CDN$ first lien senior secured notes due 2019 'BB/RR1';

--Second lien senior secured notes due 2020 'BB-/RR2'.

Fitch currently rates Air Canada as follows:

--Long-term Issuer Default Rating 'B';

--Senior secured 1st -lien debt 'BB/RR1';

--Senior secured 2d-lien debt 'BB-/RR2'.

Additional information is available at 'www.fitchratings.com'

Applicable Criteria and Related Research:

--'Corporate Rating Methodology' (Aug. 5, 2013);

--'Recovery Ratings and Notching Criteria for Nonfinancial Corporate Issuers' (Nov. 13, 2012).

Applicable Criteria and Related Research:

Corporate Rating Methodology: Including Short-Term Ratings and Parent and Subsidiary Linkage

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=715139

Recovery Ratings and Notching Criteria for Non-Financial Corporate Issuers

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=693773

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Contacts

Fitch Ratings
Primary Analyst
Joe Rohlena, CFA
Associate Director
+1-312-368-3112
Fitch Ratings, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Secondary Analyst
Craig D. Fraser
Managing Director
+1-212-908-0310
or
Committee Chairperson
Eileen Fahey
Managing Director
+1-312-368-5468
or
Media Relations:
Brian Bertsch, +1-212-908-0549 (New York)
brian.bertsch@fitchratings.com