MADRID/LONDON May 14 The International Airlines
Group has raised 390 million euros ($506
million) through a convertible bond issue to help to fund the
purchase of low-cost carrier Vueling.
Chief Executive Willie Walsh said in a statement on Tuesday
that the bond issue would also bolster liquidity and the credit
profile of IAG, home to British Airways and loss-making Spanish
flag carrier Iberia.
The bond deal shows how companies are continuing to take
advantage of investor demand for convertibles, which offer the
chance to profit from a surge in stock markets to multi-year
highs without the risk of buying shares outright.
As at May 9, more than $10 billion has been raised from
European convertibles this year, according to Thomson Reuters
data, up 44 percent on the same period last year.
The bonds, which mature in 2018 and have a fixed interest
rate of 1.75 percent, can be converted into IAG ordinary shares.
IAG said it had set a conversion price at 4.25 euros per
ordinary share, a premium of around 35 percent to the average
price of the stock on the London Stock Exchange on Tuesday
morning from the launch of the bond to its pricing.
IAG shares were down 2.3 percent at 1054 GMT, at 264.6
IAG said some of the money raised would go towards paying
off bridge loans from its British arm and Banco Santander
used to acquire Vueling for 123.5 million euros.
The company took control of Vueling in April, raising its
stake in the company to over 90 percent from 46 percent in a
deal that valued the Barcelona-based carrier at 277 million
IAG is in the painful process of restructuring Iberia and
has reached an agreement with unions to lay off more than 3,000
staff after months of intermittent strikes. The acquisition
should help IAG improve its short-haul business and offset
IAG appointed Banco Santander, Barclays, Deutsche Bank AG's
London branch, Morgan Stanley and UBS as joint bookrunners and
joint lead managers for the bond issue.