Air Canada 2006 Annual Report Download - page 91

(d) US$41 principal outstanding to mature in 2015, with quarterly repayments, at a floating interest rate equal
to the six month LIBOR rate plus 5.75% pre-payable on any interest payment date after December 23, 2007
secured by certain flight training equipment with a current carrying value of $55.
(e) Upon closing of the Air Canada IPO and satisfaction of certain customary conditions, the revolving credit
facility was amended and restated. The amended agreement established a $400 million senior secured
revolving credit facility (the "Amended Credit Facility") with a three-year term. The Amended Credit Facility
has a three year term that can be extended at Air Canada’s option for additional one-year periods on each
anniversary of the closing of the Air Canada IPO, subject to prior approval of Lenders holding no less than
two thirds of the total commitments under the Amended Credit Facility. The total amount available for
borrowing under the Amended Credit Facility is subject to a borrowing base restriction based on certain
percentages of the values of eligible accounts receivable and eligible real estate. The Amended Credit
Facility is secured by a first priority security interest and hypothec over the present and after-acquired
personal property of Air Canada, subject to certain exclusions and permitted liens, and by a first priority
charge and hypothec over certain owned and leased real property of Air Canada. Air Canada's obligations
are guaranteed by 1209265 Alberta Ltd., a subsidiary of Air Canada, which provides a first priority security
interest over its present and after-acquired personal property, subject to certain exclusions and permitted
liens, as security for its guarantee obligations. The Amended Credit Facility contains customary
representations and warranties and is subject to customary terms and conditions (including negative
covenants, financial covenants and events of default). The interest rate margin ranges from LIBOR plus
2.25% to 3.25% or prime plus 1.25% to 2.25% (based on Air Canada's earnings before interest, taxes,
depreciation, amortization and obsolescence and aircraft rent). As at December 31, 2006, no amount was
drawn under this facility.
(f) In connection with the initial public offering of the Jazz Air Income Fund (“Jazz IPO”), Jazz arranged for a
senior secured syndicated credit facility in the amount of $150. On closing of the Jazz IPO, $115 was drawn
under the credit facility ($113 net of fees). The facility bears interest at floating rates and has a three year
term maturing in 2009. The outstanding credit facility is secured by substantially all the present and future
assets of Jazz. Jazz entered into swap agreements with third parties with a notional value of $115 to
receive floating rates and pay fixed rates of 7.09%. Subsequent to December 31, 2006, the original term of
this facility was extended to 2010.
(g) The Corporation has entered into aircraft and engine lease transactions with several special purpose
entities that qualify as VIEs. The debt has a weighted average effective interest rate of approximately 8%.
The aircraft are charged as collateral against the debt by the owners thereof. The creditors under these
leasing arrangements have recourse to the Corporation, as lessee, in the event of default or early
termination of the lease. Aircraft related debt amounting to US$902 ($1,051) [2005 — US$965 ($1,125)] is
summarized as follows:
Final
Maturity 2006 2005
Canadian Regional Jet 2007 – 2011 $ 316 $ 329
Boeing 767-300 2011 – 2016 211 231
Engines 2008 71 78
Airbus 319 2011 – 2014 304 331
Airbus 321 2017 149 156
$ 1,051 $ 1,125
(h) Under AcG-15, the Corporation is the primary beneficiary of certain of the Fuel Facility Corporations in
Canada. The debt is secured by a general security agreement covering all assets of the Fuel Facility
Corporations.
(i) Capital lease obligations, related to computer equipment, facilities and 37 aircraft, total $1,281 ($80 and
US$1,030) [2005 total $1,365 ($87 and US$1,096)]. The debt has a weighted average effective interest rate
of approximately 8% and final maturities range from 2008 to 2027. During 2006 the Corporation recorded
interest expense on capital lease obligations of $101 (2005 – $119).
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Combined Consolidated Financial Statements 2006