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This announcement is not for release in the United States of America, Canada, Australia, South Africa or Japan or any other jurisdiction in which such distribution would be prohibited by applicable law
CONVERTIBLE BOND LAUNCH
International Airlines Group (IAG) is launching a senior unsecured convertible bond offer of up to an approximate maximum amount of €400 million to fund its acquisition of Vueling, enhance liquidity and lower its cost of capital.
The bonds, which are due to mature in 2018, can be converted into ordinary shares of IAG. It is expected that the bonds' conversion price will be set at a premium of between 30 - 35 per cent with a fixed rate of interest between 1.75 – 2.5 per cent, payable semi-annually in arrears. The final size of the offer will be determined at the time of pricing which is expected to be later today. Full conversion of the bonds would increase the number of IAG shares in issue by up to five per cent.
On April 26, 2013, IAG completed the acquisition of 44.66 per cent of Vueling following a cash tender offer. When added to the 45.85 per cent of Vueling shares owned by IAG's subsidiary Iberia, the IAG Group now owns 90.51 per cent of Vueling.
The cost of purchasing the Vueling shares was €123.5 million which was funded initially by bridge loans from British Airways and Banco Santander. The net proceeds from the bonds will be used partly for the repayment of these loans.
IAG chief executive Willie Walsh said: "We are raising cash to fund our acquisition of Vueling, an airline that will be a great addition to IAG. It will also enable IAG to have cash available to improve general liquidity and improve the credit profile of the group".
The bonds are expected to carry a fixed rate of interest of between 1.75 - 2.5 per cent per annum payable semi-annually in arrears. The conversion price is expected to be set at a premium of between 30 - 35 per cent to the volume weighted average price of the ordinary shares of IAG on the London Stock Exchange in the period from launch to pricing.
The bonds will be issued at 100 per cent of their principal amount and, unless previously redeemed, converted or purchased and cancelled, will be redeemed at 100 per cent of their principal amount on the fifth anniversary of the issue of the bonds in May 2018. IAG will have the option to redeem the bonds after three years from issue at their principal amount, together with any accrued interest. This option will be available if the volume weighted average price of the ordinary shares shall have been at least 130 per cent of the conversion price over a specified period or if, at any time, 15 per cent or less of the principal amounts of the bonds remain outstanding.
Closure of the bookbuilding exercise is expected today with settlement and the issue of bonds expected to occur on May 31, 2013.
IAG proposes to publish an offering circular relating to the issue of the bonds shortly after the closure of the bookbuilding exercise. The offering circular will contain full details of the terms and conditions of the bonds.
It will make applications for the bonds to be admitted to the Official List of the Financial Conduct Authority and to trading on the Professional Securities Markets of the London Stock Exchange plc.
Under the terms of the convertible bond offer, there will be a normal 90-day lock-up period for IAG on issuing or selling IAG shares and securities. This will start from the date of pricing,
IAG has appointed Banco Santander, Barclays, Deutsche Bank AG London Branch, Morgan Stanley and UBS Investment Bank as joint bookrunners and joint lead managers.
This announcement does not constitute or form part of an offer to sell or the solicitation of an offer to subscribe for or otherwise acquire any securities. The bonds and the ordinary shares have not been and will not be registered under the U.S. Securities Act of 1933 and may not be offered or sold in the United States.
This announcement is directed only at persons who (i) are outside the United Kingdom, (ii) in the United Kingdom ("UK") who are (a) persons who have professional experience in matters relating to investments who fall within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"), (b) high net worth entities and other persons to whom it may otherwise lawfully be communicated falling within Article 49(1) of the Order, or (c) persons to whom it may otherwise lawfully be communicated or (iii) in any other jurisdiction, where action for that purpose may be required. This announcement must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this communication relates is available only to relevant persons and will be engaged in only with relevant persons.
Banco Santander, Barclays, Deutsche Bank AG, London Branch, Morgan Stanley and UBS Investment Bank are acting for IAG and no one else in connection with the offer of the bonds and will not be responsible to any other person for providing the protections afforded to their client, or for providing advice in relation to the proposed offer of the bonds.