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Jazz Air Income Fund ("Jazz" or the "Fund'")
(TSX:JAZ.UN) announced that in response to strong investor demand, it has
entered into an agreement to increase the size of its previously announced
offering of convertible debentures. The Fund has entered into an agreement
with a group of underwriters led by TD Securities, BMO Capital Markets, CIBC
and RBC Capital Markets, to sell $75 million principal amount of 9.50%
convertible unsecured subordinated debentures (the "Debentures"), an increase
of $25 million principal amount of debentures. The Fund has granted the
Underwriters an option, exercisable in whole or in part at any time up until
30 days after the Closing Date, to purchase an additional $11.25 million
principal amount of Debentures, at the same price. If the Over-allotment
Option is exercised in full, the total gross proceeds of the financing will
be $86.25 million. Proceeds from the Offering will be used for working
capital requirements and for general purposes of the Fund.
The Debentures will bear interest at a rate of 9.50% per annum payable
semi-annually in arrears on June 30 and December 31 in each year commencing
on June 30, 2010, and will mature on December 31, 2014 (the "Maturity Date").
The Debentures will be convertible at the holder's option into trust units of
Jazz at any time prior to the earlier of the Maturity Date and the date fixed
for redemption at a conversion price of $5.25 per trust unit (the "Conversion
Price"). The Debentures will not be redeemable on or before December 31,
2012. After December 31, 2012 and prior to December 31, 2013, the Debentures
may be redeemed in whole or in part from time to time at Jazz's option at a
price equal to their principal amount plus accrued interest, provided that
the volume weighted average trading price for the trust units is not less
than 125% of the Conversion Price. On and after December 31, 2013 and prior
to the Maturity Date, the Debentures may be redeemed in whole or in part from
time to time at Jazz's option at a price equal to their principal amount plus
accrued interest. Subject to regulatory approval, Jazz may satisfy its
obligation to repay the principal amount of the Debentures on redemption or
at maturity, in whole or in part, by delivering that number of trust units
equal to the amount due divided by 95% of the market price for the units at
that time, plus accrued interest in cash.
The offering will be made in all provinces and territories of Canada and
is expected to close on or about November 12, 2009, subject to regulatory
approval. The trust units and Debentures have not been and will not be
registered under the United States Securities Act of 1933 and may not be
offered or sold in the United States absent registration or applicable
exemption from the registration requirement of such Act. This news release is
not an offer of securities for sale in the United States.
Caution Regarding Forward Looking Information
Certain statements in this news release may contain forward-looking
statements. These forward-looking statements are identified by the use of
terms and phrases such as "anticipate", "believe", "could", "estimate",
"expect", "intend", "may", "plan", "predict", "project", "will", "would", and
similar terms and phrases, including references to assumptions. Such
statements may involve but are not limited to comments with respect to
strategies, expectations, planned operations or future actions.
Forward-looking statements, by their nature, are based on assumptions and are
subject to important risks and uncertainties. Any forecasts or
forward-looking predictions or statements cannot be relied upon due to,
amongst other things, changing external events, general uncertainties of the
business and matters that are not within the control of Jazz. Such statements
involve known and unknown risks, uncertainties and other factors that may
cause the actual results, performance or achievements to differ materially
from those expressed in the forward-looking statements. The forward-looking
statements contained herein represent Jazz's expectations as of the date they
are made and are subject to change after such date. However, Jazz disclaims
any intention or obligation to update or revise any forward-looking
statements whether as a result of new information, future events or
otherwise, except as required under applicable securities regulations.
About Jazz Air Income Fund
The Fund is an unincorporated, open-ended trust established under the
laws of the Province of Ontario, created to indirectly acquire and hold an
interest in the outstanding limited partnership units of Jazz.
Jazz is the second largest airline in Canada based on fleet size and the
number of routes operated. Jazz operates more flights and flies to more
Canadian destinations than any other Canadian carrier. Jazz forms an integral
part of Air Canada's domestic and transborder market presence and strategy.
Jazz is not a typical airline. The airline has a commercial agreement
with Air Canada that is the core of its business. Under the CPA, Air Canada
currently purchases substantially all of Jazz's fleet capacity based on
predetermined rates. The CPA provides commercial flexibility, low trip costs
and connecting network traffic to Air Canada.
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