Air Canada priced its first enhanced equipment trust certificates, the $714.5 million Air Canada Pass Through Certificates, Series 2013-1, on Thursday, the airline said in a press release.
Three tranches of notes were priced, one of which was added on Thursday. The $424.3 million class A certificates priced with a fixed rate coupon of 4.12%; the $181.8 million class B certificates priced with a fixed rate coupon of 5.37% and the $108.2 million, class C certificates priced at a fixed rate coupon of 6.62%.
The deal is backed by five Boeing 777-300ER aircraft that are due to be delivered from June 2013 to February 2014. The offering is expected to close on May 9, 2013, subject to customary closing conditions.
Air Canada structured the deal under the international version of Section 1110 of the U.S. Bankruptcy Code, the Cape Town Convention on International Interests in Mobile Equipment and the Protocol thereto on Matters Specific to Aircraft Equipment. Canada enacted the so-called Cape Town Convention on April 1st.
Under the Cape Town Convention, creditors (financiers) can register international security interests and the code provides for standard remedies in the event of default by the debtor.
The Aircraft Protocol supplements and modifies the Convention to meet the particular requirements of aircraft financing. It offers creditors additional remedies, including the ability to require removal of an aircraft from the national civil aircraft register and export it.