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Air Canada emerges from bankruptcy
New York, Oct. 1 - Air Canada said it emerged from bankruptcy on Thursday and completed its restructuring.
The Montreal-based airline said it has cut net debt and capitalized operating lease obligations to less than C$5 billion from C$12 billion and raised C$1.1 billion of new equity.
On emergence, Air Canada had C$1.9 billion of cash on hand.
The company is "well positioned to generate positive operating income and cash flow," Air Canada said in a news release.
Under the reorganization, ACE Aviation Holdings Inc. has become the parent holding company above the reorganized Air Canada and other legal entities. In addition to Aeroplan, Air Canada Jazz, Destina.ca and Touram (Air Canada Vacations) which were already established as separate legal entities, Air Canada Technical Services, Air Canada Cargo and Air Canada Groundhandling were established as separate legal entities.
Air Canada's restructuring with General Electric Capital Corp. became effective, restructuring leases and including an agreement on financing to be used for future acquisitions of new regional jet aircraft. The exit term loan is now C$540 million.
ACE Aviation issued C$850 million of shares in a rights offering with Deutsche Bank Securities Inc. as standby purchaser.
Cerberus ACE Investment LLC and Promontoria Holding III BV, an affiliate of Cerberus Capital Management LP, bought C$250 million of ACE's convertible preferred shares, equivalent to 9.16% of the fully diluted equity on an as-converted basis.
ACE issued 77.33 million class A variable voting shares and 11.48 million class B voting shares. Trading on the Toronto Stock Exchange will start on Oct. 4. Ernst & Young, the court-appointed monitor and disbursing agent, has retained 7.58 million shares in escrow pending resolution of disputed claims.
Air Canada filed for bankruptcy protection on April 1, 2003.
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