Copa schedules private placement

Copa schedules private placement

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Panamanian airline Copa Airlines said on Monday that it plans to raise up to $402 million in funding from the sale of convertible bonds in a private placement.

The airline intends to sell at least $350 million in new 2025 notes under Rule 144A and give investors 13 days to acquire another $52.5 million in bonds at the same conditions, it said in a press release.

Copa did not identify the buyers in the private placement or provide pricing information, but it said the bondholders could convert the notes for cash or shares in the company "in certain circumstances and during specified periods."

The airline added that it can redeem the notes any time after April 2023 if its share prices exceed 130% of the conversion price for a specified period of time.

Copa said it will use the proceeds for "general corporate purposes" without giving details.

A spokesperson for the airline said Bank of America, Citi and JPMorgan were the bookrunners on the private placement, but he did not provide more information. Bankers involved in the deal declined to comment.

Copa took out $145 million in 12-month loans in March and another $150 million in April as travel restrictions during the coronavirus pandemic are expected to cause a 11.4% drop in revenues to $596 million in the first quarter this year, according to securities filings.

Efforts to curb the spread of the coronavirus caused an "unprecedented reduction in demand, which has significantly affected our business, financial condition and operating results," Copa said in a filing. 

"Seat miles" dropped 35.7% and "revenue passenger miles" fell 43.4% in March, compared to the same month last year. The airline has not operated commercial flights since March 22 and it anticipates that the earliest it can resume commercial operations is June 1.

Copa is scheduled to release its first quarter earnings on May 6. The price of its stock has fallen 60% year to date, according to stock information published on the company's investor relations website. Shares in Copa dropped 17.6% to close at $41.33 on Monday.