Move ensures "strong liquidity"
BA this afternoon (July 17) completed the terms of its plan to raise £350m through a convertible bonds issue.
It is the first part of the airline's strategy, announced this morning, to raise about £600m to ensure its "strong liquidity" in the current challenging climate.
BA said the £350m offering of senior unsecured convertible bonds will be due in 2014 and the conversion price has been fixed at 189p per share.
The airline said that this represents a premium of "approximately 37.6% over the volume weighted average price of British Airway's ordinary shares from launch to pricing."
It added that the coupon had been set at 5.8% and that settlement was expected around August 13, 2009.
The airline said this morning that the rest of the aimed for £600m would be raised through releasing some bank guarantees. This will provide the cash-strapped airline with up to £330m.
BA also announced that it expected to make a £100m operating loss for the three months to June 30 "slightly better than market expectation."
BA said it had agreed term with the trustees of its pension fund to release back the bank guarantees.
These had originally been provided in 2006 but were accessible only if the airline became insolvent.
"This means that up to $540m (approximately £330m) of bank facilities will become available for the airline to draw in cash at any time until June 21, 2012," BA said.
Willie Walsh, BA's ceo said: "Following discussions with institutional investors, we're taking action to improve our liquidity and strengthen our position within the industry.
"This goes hand-in-hand with our cost reduction and efficiency initiatives which are designed to create the right conditions for our sustainable, long term profitability. It also supports our continued investment programme to maintain our position as a leading global premium airline."
The airline is currently in talks with two unions, Unite and GMB which represent 36,000 of its 40,000 strong workforce, at the UK arbitration service ACAS.
The two sides have so far failed to reach agreement on the carrier's plans to scrap 3,700 jobs, impose a two year pay freeze and change working conditions.
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