Air Canada 2007 Annual Report Download - page 103

Consolidated Financial Statements and Notes
103
the committed long-term aircraft fi nancing for the aircraft to be delivered. The last aircraft in this PDP fi nancing is
currently scheduled for delivery in November 2008, at which time, Air Canada expects to have fully repaid the PDP
loans. At year-end 2007, the balance outstanding on the PDP loans was $521 (US$528), which includes two additional
draws of $26 (US$26) each. The long-term fi nancing is included within Long-term debt and capital leases within the
Consolidated statement of fi nancial position. The year to date capitalized interest relating to this fi nancing is $5 at
an interest rate of 30 day LIBOR plus 1.14% (6.16% as at December 31, 2007). As the loans are not due until 2013,
the principal repayment is shown in the thereafter amount in the table above.
(d) US$151 principal outstanding on acquisitions of two A340-500 aircraft fi nanced through conditional sales agreements.
Principal and interest is paid quarterly until maturity in 2019. The purchase price instalments bear interest at a three
month LIBOR rate plus 2.9% (7.74% - 7.97% as at December 31, 2007 and 8.27% as at December 31, 2006). The
carrying value of the two A340-500 aircraft provided as security under the conditional sales agreements is $265 as
at December 31, 2007.
(e) US$25 principal outstanding to mature in 2009, with semi-annual repayments, at a fi xed interest rate of 4.50% plus
an annual 2.0% guarantee fee.
(f) US$38 principal outstanding to mature in 2015, with quarterly repayments, at a fl oating interest rate equal to the six
month LIBOR rate plus 5.75% pre-payable on any interest payment date after December 23, 2007. The next interest
payment date is March 20, 2008. The debt is secured by certain fl ight training equipment with a current carrying
value of $47.
(g) The revolving credit facility is a $400 senior secured revolving credit facility (the “Credit Facility”). The 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 Credit Facility. The total amount available for borrowing under the 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 Credit Facility is secured by a fi rst 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 fi rst 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 fi rst 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 Credit Facility contains customary representations and warranties and is subject to customary terms
and conditions (including negative covenants, fi nancial 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, 2007, no amount was drawn
under this facility.
(h) During 2007, the Corporation refi nanced fi ve Canadair Regional Jet (“CRJ”) aircraft. The refi nancing included a payment
of other obligations under the leasing arrangement to third parties of $36. During 2007 the debt of $9 relating to
one of the CRJ aircraft was repaid. As at December 31, 2007, the principal outstanding is $33 on the four CRJ aircraft.
Principal and interest are paid quarterly to maturity in 2012. The fi nancing bears interest at a fl oating rate of the
3 month Canadian Banker’s Acceptance rate plus 1.7%. The loan is secured by the fi ve delivered aircraft with a carrying
value of $29.
(i) At December 31, 2006, Jazz reported 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 fl oating
rates and had a three year term maturing in 2009. The outstanding credit facility was secured by substantially all
the present and future assets of Jazz. Jazz had entered into swap agreements with third parties with a notional
value of $115 to receive fl oating rates and pay fi xed rates of 7.09%. Subsequent to December 31, 2006, the original
term of this facility was extended to 2010. Effective May 24, 2007, the results and fi nancial position of Jazz are not
consolidated within Air Canada (refer to Note 1).