* Amount raised from bond will top initial target
* Latest move by IAG to strengthen balance sheet
* Could also provide funds to take advantage of a travel
recovery
(Updates with final terms)
LONDON, May 11 (Reuters) - British Airways-owner IAG
said on Tuesday it would raise 825 million euros ($1
billion) from a convertible bond, the group's latest move to
strengthen its balance sheet as travel remains at very low
levels during the pandemic.
IAG, which also owns Aer Lingus, Iberia and Vueling, has a
weekly cash burn rate of 175 million euros while most of its
fleet is grounded due to restrictions, meaning its focus over
the past year has been on raising funds.
Forecasting a travel recovery from July, the group said last
week that it had liquidity of 10.5 billion euros, helped
recently by a new revolving credit facility and the deferral of
some pension payments.
On Tuesday, it said its convertible bond issue would boost
its liquidity by around 825 million euros. Strong demand for the
offering meant it would raise more than the 800 million euros
initially targeted for the senior unsecured bonds, which are
convertible into IAG shares, and due in 2028.
The group's shares were down 5.6% at 197 pence in afternoon
trading, underperforming a 2% decline in London's blue-chip
share index.
IAG said the proceeds would strengthen its finances given
continued uncertainty around the travel recovery, but could also
be used to provide extra resources to take advantage of a
recovery in demand.
"This is simply the next move for IAG to continue to bolster
liquidity while the crisis drags on," said Bernstein analyst
Daniel Roeska.
IAG was left disappointed by Britain's cautious reopening of
travel last week, which left its big markets, Spain and the
United States, off a list of low-risk destinations.
Announcing the final terms of the bonds, IAG said the bonds
would carry a fixed rate of interest of 1.125% payable
semi-annually in arrears and the conversion price of the bonds
has been set at 3.3694 euros per share, a premium of 45% over
the volume weighted average price of the shares in the period
from launch to pricing, translated into euros.
($1 = 0.8217 euros)
(Reporting by Sarah Young; editing by Paul Sandle and Susan
Fenton)
International Airlines (IAG)
