Air Canada 2013 Annual Report Download - page 49

2013 Management’s Discussion and Analysis
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Giving effect to the Air Canada 2009 Pension Regulations as outlined above, total employer pension funding contributions
during 2013 amounted to $475 million.
(Canadian dollars in millions) 2013
Past service domestic registered plans $ 220
Current service domestic registered plans 168
Other pension arrangements(1) 87
Pension funding obligations $ 475
(1) Includes retirement compensation arrangements, supplemental plans and international plans.
Assuming Air Canada funds its pension obligations under the 2014 Regulations, Air Canada’s projected pension funding
obligations, on a cash basis, for the years 2014 to 2018 would be as follows:
(Canadian dollars in millions) 2014 2015 2016 2017 2018
Past service domestic registered plans $202 $200 $200 $ 200 $200
Current service domestic registered plans 149 145 141 136 131
Other pension arrangements(1) 88 93 96 99 93
Total projected pension funding obligations $439 $438 $437 $ 435 $424
(1) Includes retirement compensation arrangements, supplemental plans and international plans.
9.8. Contractual Obligations
Private Offerings of Senior Secured Notes and Senior Secured Credit Facility
On September 26, 2013, Air Canada completed private offerings of senior secured notes, consisting of (i) US$400 million
principal amount of 6.750% senior secured first lien notes due 2019 and $300 million principal amount of 7.625% senior
secured first lien notes due 2019 (the "New Senior First Lien Notes") and (ii) US$300 million principal amount of 8.750%
senior secured second lien notes due 2020 (the "New Senior Second Lien Notes" and together with the New Senior First Lien
Notes, the "New Senior Notes"). Air Canada also completed the closing of its US$400 million new senior secured (first lien)
credit facility, comprised of a US$300 million term loan maturing in 2019 and a US$100 million revolving credit facility
(collectively, the "New Credit Facility"). As at December 31, 2013, Air Canada had not drawn on the revolving credit facility.
The weighted average interest rate of the new financing arrangements is approximately 7% per annum.
Air Canada received, in total, net proceeds of approximately $1,300 million from the sale of the New Senior Notes and from
term loan borrowings under the New Credit Facility (in each case, after deduction of the applicable transaction costs, fees and
expenses). Air Canada applied a portion of such net proceeds and borrowings to purchase all of its outstanding 9.250% Senior
Secured Notes due 2015, 10.125% Senior Secured Notes due 2015 and 12.000% Senior Second Lien Notes due 2016
(collectively, the "Existing Notes") that were validly tendered on or before the early tender deadline (which was September 18,
2013), in connection with the cash tender offers commenced by the Corporation on September 5, 2013. In October 2013,
Air Canada used a portion of the remaining net proceeds and borrowings to redeem the remaining Existing Notes of
$70 million not tendered prior to the early tender deadline. Air Canada is using the remaining net proceeds for working capital
and general corporate purposes.
In conjunction with the purchase of the Existing Notes, the premiums paid to noteholders, in the amount of $61 million, as
well as the write-off of existing transaction costs and discounts related to the Existing Notes, in the amount of $34 million,
were recorded as an interest charge in the third quarter of 2013.
The table below provides interest and principal repayment obligations on Air Canada’s long-term debt and finance lease
obligations as at December 31, 2013. The table below also includes the impact of the financing associated with one
Boeing 777-300ER aircraft, the proceeds of which are currently held in escrow and will be drawn during the first quarter of
2014 upon delivery of the aircraft. Refer to section 9.6 of this MD&A for additional information. The table below also reflects
the completion of the private offerings of senior secured notes and the new senior secured credit facility described above.