Air Canada 2009 Annual Report Download - page 91

Consolidated Financial Statements and Notes
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C) SIGNIFICANT EVENTS
During 2009, the Corporation entered into the following transactions in an effort to mitigate the Corporation’s liquidity risks
as described in Note 15 (refer to Notes 3, 6 and 11 for additional detail on these fi nancing activities):
During the fourth quarter of 2009
• Completed a share and warrant public offering for net proceeds of $249 (refer to Note 11 for further details).
During the third quarter of 2009
• Completed a secured term credit facility (the “Credit Facility”) for fi nancing proceeds of $600, less fees of $20.
The Credit Facility is a fi ve-year facility, with the fi rst principal repayment due in August 2010, and currently bears
interest at 12.75%. Under the Credit Facility, 10 million warrants were issued which entitle the debt holders to
acquire up to 10 million shares in the Corporation, as further described in Note 6. As part of the transactions related
to the closing of the Credit Facility, existing fi nancing arrangements of $166 were repaid as follows:
- The revolving credit facility, as further described in Note 6L, was repaid in the amount of $49. The rights of the
lender under the revolving credit facility were assigned to the lenders under the Credit Facility;
- The spare engine fi nancing agreement, as further described in Note 6J, was partially repaid in the amount of
$38. This represented the repayment related to 22 engines under a spare engine fi nancing agreement, with
10 engines remaining under the agreement with a loan value of $72 as at December 31, 2009;
- The Aeroplan Canada Inc. (“Aeroplan”) loan, as further described below, was repaid in the amount of $79.
Aeroplan is a participating lender under the Credit Facility.
• Extended or renewed labour agreements for 21 months with all of the Corporation’s Canadian-based unions were
completed by July 2009. The agreements provide for no increases to wage rates, no changes to group insurance
coverage or benefi ts, or pension benefi t levels during the contract extension or renewal periods;
• Pension funding agreements with all of the Corporation’s Canadian-based unions (the “Pension MOUs”) and the
adoption of the Air Canada Pension Funding Regulations, 2009 (the “Air Canada 2009 Pension Regulations”). The
Air Canada 2009 Pension Regulations relieve the Corporation from making any special (past service cost) payments
for the period beginning April 1, 2009 and ending December 31, 2010. Thereafter, in respect of the period from
January 1, 2011 to December 31, 2013, the aggregate annual past service contributions shall equal the lesser of (i) $150,
$175, and $225 in respect of 2011, 2012, and 2013, respectively and (ii) the maximum past service contributions
permitted under the Income Tax Act. Pursuant to the Pension MOUs, on October 26, 2009 the Corporation issued,
to a trust, 17,647,059 Class B Voting Shares. This number of shares represented 15% of the shares of Air Canada
issued and outstanding as at the date of the Pension MOUs and the date of issuance (in both cases after taking into
account such issuance). All net proceeds of the sale of such shares held by the trust are to be contributed to the
pension plans;
• An agreement with a supplier for non-refundable proceeds of $230 in consideration of various contractual
commitments. For accounting purposes, the recognition of these proceeds was deferred in order to be applied to
reduce the cost of these contractual commitments as they are incurred;
• Amendments to credit card processing agreements with one of its principal credit card processors to revise the levels
of unrestricted cash (as defi ned per the agreement and generally based on the aggregate sums of Cash and cash
equivalents and Short-term investments) required to be maintained as described further in Note 15;
• An extension of the repayment date of a short-term loan of $78 (US$75) entered into in 2008, which was originally
due in 2009, to 2013. This loan is described in Note 6F;