IAG to launch bond offer to fund acquisition of Vueling

International Airlines Group (IAG) said it is launching a senior unsecured convertible bond offer of up to 400m euros to fund its acquisition of Spanish carrier Vueling, enhance liquidity and lower its cost of capital.

International Airlines Group (IAG) said it is launching a senior unsecured convertible bond offer of up to 400m euros to fund its acquisition of Spanish carrier Vueling, enhance liquidity and lower its cost of capital.

The bonds can be converted into ordinary shares of IAG and are due to mature in 2018. The company expects the bonds conversion price to be set at a premium of between 30% to 35% with a fixed rate of interest between 1.75% to 2.5%, payable semi-annually in arrears.

Full conversion of the bonds would see an up to 5.0% increase in the number of IAG shares in issue.

IAG is the sole owner of Vueling after acquiring a 44.66% interest in April, adding to the 45.85% already owned by its subsidiary Iberia.

The airline group paid €123.5m for Vueling shares which was funded initially by bridge loans from British Airways and Banco Santander. The net proceeds from the bonds will be used partly for the repayment of the loans.

"We are raising cash to fund our acquisition of Vueling, an airline that will be a great addition to IAG," Chief Executive, Willie Walsh, said.

"It will also enable IAG to have cash available to improve general liquidity and improve the credit profile of the group."

RD

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