Panamanian airline Copa Holdings, S.A. (NYSE: CPA) today announced that it is seeking to raise $350 million USD in debt with a maturity date in 2025 in a private offering. The airline announced that it also expects to grant the initial purchasers of the notes an option to purchase, for settlement within a period of 13 days from, and including, the date notes are first issued, up to an additional $52,500,000 principal amount of notes.

Update: New Copa Notes To Pay 4.5%

Copa had no comment, but with over $1 billion in cash and short term assets, the $350 million private placement appears to be part of the company strategy to shore up defenses for plummeting revenues and the oncoming recession due to the Coronavirus COVID-19 Pandemic. Copa’s relatively strong balance sheet puts it in a strong position compared to regional rivals such as struggling Avianca (NYSE: AVH, BVC: PFAVH) and LATAM (NYSE:LTM, IPSA: LTM)

Terms:

• The notes will be senior, unsecured obligations of Copa, will accrue interest payable semi-annually in arrears and will mature on April 15, 2025, unless earlier repurchased, redeemed or converted.
• Noteholders will have the right to convert their notes in certain circumstances and during specified periods.
• Copa will settle conversions by paying or delivering, as applicable, cash, shares of its Class A common stock or a combination of cash and shares of its Class A common stock, at Copa’s election.
• The notes will be redeemable, in whole or in part, for cash at Copa’s option at any time, and from time to time, on or after April 17, 2023and on or before the 40th scheduled trading day immediately before the maturity date, but only if the last reported sale price per share of Copa’s Class A common stock exceeds 130% of the conversion price for a specified period of time.
• The notes will be redeemable, in whole and not in part, at Copa’s option in connection with certain changes in tax law at any time. The redemption price will be equal to the principal amount of the notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, plus a make-whole premium.
• The interest rate, initial conversion rate and other terms of the notes will be determined at the pricing of the offering.
• Copa intends to use the net proceeds from the offering for general corporate purposes.