(Alliance News) - International Consolidated Airlines Group SA on Tuesday launched EUR825.0 million convertible bond offering amid ongoing uncertainty over air travel.
The British Airways parent is offering senior unsecured bonds due 2028, which will carry a fixed rate of interest of 1.125% payable semi-annually in arrears.
The conversion price of the bonds has been set at EUR3.3694 per share, which represents a premium of 45% over the volume weighted average price of IAG shares.
The stock was trading 6.2% lower in London on Tuesday afternoon at 196.87 pence a share, giving IAG a market capitalisation of GBP9.59 billion.
Settlement of the bonds is expected to take place on Tuesday next week.
"Given the continuing uncertainty in respect of air travel, the net proceeds from the offering will be used by IAG to strengthen the group's balance sheet and increase the group's overall liquidity position and provide the group with increased operational and strategic flexibility to take advantage of a recovery in demand," the company said.
The offering comes after disappointment over the UK government's plans to reopen the travel industry. On Friday evening, Westminster revealed that Portugal, Gibraltar and Israel are among just 12 destinations on England's new 'green list' for travel, meaning visitors do not need to self-isolate on their return home.
Industry leaders said the government's approach represented an "excess of caution" and demanded greater clarity over the formation of the green list.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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International Airlines (IAG)