ACE Aviation Holdings Completes Offerings and Repays GE Credit Facility

On April 6, 2005, ACE Aviation Holdings Inc. (ACE), the parent company of Air Canada, completed concurrent offerings of (i) 11,350,000 class A variable voting shares and class B voting shares at $37 per share for gross proceeds of $419,950,000, and (ii) $300 million aggregate principal amount of 4.25 per cent convertible senior notes due 2035. Further to the exercise by the underwriters of their over-allotment options, ACE completed on April 13, 2005 additional offerings of (i) 1,135,000 class A variable voting shares at $37 per share for gross proceeds of $41,995,000, and (ii) $30 million aggregate principal amount of 4.25 per cent convertible senior notes due 2035.

The offerings were made in Canada pursuant to prospectuses filed in each of the provinces and on a private placement basis in the US pursuant to Rule 144A and Regulation S under the US Securities Act of 1933.

The aggregate gross proceeds for the offerings (including the proceeds from the exercise of the over-allotment options) were approximately $792 million with ACE receiving net proceeds of approximately $762 million, after commissions and expenses. ACE used approximately $553 million of the aggregate net cash proceeds of the offerings to repay all of its outstanding debt under the exit credit facility entered into with General Electric Capital Corp. in connection with the restructuring of Air Canada and certain of its subsidiaries.
Concurrently with the closing of the offerings, Air Canada established a two-year senior secured revolving credit facility in an aggregate amount of $300 million with a syndicate of lenders led by Bank of Montreal and Royal Bank of Canada.

The equity offering was made through a syndicate of underwriters led by RBC Dominion Securities Inc., BMO Nesbitt Burns Inc. and CIBC World Markets Inc. and including TD Securities Inc., Citigroup Global Markets Canada Inc., Deutsche Bank Securities Ltd., Merrill Lynch Canada Inc., Genuity Capital Markets, Canaccord Capital Corp., Desjardins Securities Inc., Dlouhy Merchant Group Inc., Orion Securities Inc., Raymond James Ltd., Research Capital Corp. and Westwind Partners Inc. The convertible senior notes offering was made through a syndicate of underwriters led by RBC Dominion Securities Inc., Merrill Lynch Canada Inc. and BMO Nesbitt Burns Inc. and including CIBC World Markets Inc., Citigroup Global Markets Canada Inc., Deutsche Bank Securities Ltd., TD Securities Inc. and Genuity Capital Markets.

In connection with the offerings, ACE was represented by Sydney John Isaacs, senior vice-president, corporate development and chief legal officer, and Jocelyn Côté, associate general counsel, and by Stikeman Elliott LLP with a team that included Jean Marc Huot, Mihkel Voore, France Margaret Bélanger, David Massé and John Segleski (corporate/securities) and Robert Hogan, Kevin Kelly and Frank Mathieu (tax). In the US, ACE was represented by Skadden, Arps, Slate, Meagher & Flom LLP with a team that included Christopher Morgan, Riccardo Leofanti, Robert Normandeau and Sally Whitehead.

The syndicates of underwriters were represented by Osler, Hoskin & Harcourt LLP with a team that included Robert Yalden, Desmond Lee, Robert Hughes, Joseph Cosentino and Max Rogan (corporate/securities) and Elaine Marchand and Didier Fréchette (tax); and in the US by Shearman & Sterling LLP with a team including Brice Voran, Jason Lehner, Jennifer Mazin, Tania Garcia-Eaton and Tasmin Waley.

In connection with the establishment of the revolving credit facility, Air Canada was represented by its general counsel, David Shapiro, and a team from Stikeman Elliott that included Ron Ferguson, Craig Mitchell, Brenda Hebert, Howard Rosenoff, D’arcy Nordick and Ashley Mason. The banking syndicate was represented by a team from Osler, Hoskin & Harcourt that included Mike Matheson, Mark Rasile, Tim Schumacher, Constantine Troulis and Danna Donald.