American Airlines avoids bankruptcy through equity raise

by   CIJ iDesk I
2020-06-27   17:53

Fears that American Airlines Group would go bankrupt eased this week after the company managed to raise around $2bn through a combination of new shares and bonds. The company managed to sell off just over 74 billion million shares along with $1bn in convertible notes. The latter carry a 6.5 percent coupon and are due in 2025 and could be converted into common stock assuming that certain conditions are met. The airline wrote in a statement that it would use the net proceeds of the new funds for general corporate purposes and to enhance its liquidity position, which is the sort of language companies that have run out of cash tend to use. The shares were sold for $13.50 each, marking a steep discount compared to the $16.000 they could be had for just before the equity raise was announced. Taken together, the new money is dilutive for existing shareholders by up to 135 million shares, whiel the underwriters get $150m in additional shares and convertible debt.