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American Air to Raise $1.94 Billion in Share, Convertible Deals

Mary Schlangenstein, Crystal Tse and Gillian Tan

(Bloomberg) -- American Airlines Group Inc. is set to raise $1.94 billion by selling equity and convertible bonds later this week after increasing the size of both offerings.

The stock sale, at $13.50 a share, will generate about $1 billion, American said in a statement Tuesday, confirming details reported by Bloomberg News. That’s a discount of almost 16% compared with the closing price before the deal launched and 9.5% from American’s closing price Monday.

The airline also is set to issue $1 billion in convertible notes due 2025 with a 6.5% coupon and a conversion price of about $16.20 a share. That’s 20% premium over the price in the share offering. The net proceeds for American from both sales include underwriting discounts and other offering expenses.

The deals underscore the broad range of tools that airlines are using to bolster liquidity after a travel collapse caused by the Covid-19 pandemic. American also is offering $1.5 billion in senior secured junk bonds maturing in 2025 and marketing a $500 million four-year loan facility. In addition, U.S. carriers have received $25 billion in federal aid and have access to government loans.

American fell 6% to $14.02 at 9:56 a.m. in New York, the biggest drop on the S&P 500 Index. The shares fell 48% this year through Monday, in line with the decline of a Standard & Poor’s index of major U.S. rivals.

The company’s share and convertible sales, which are set to close June 25, were both boosted from an original plan that called for offerings of $750 million each. American has also granted the underwriters a 30-day option to buy another $150 million in shares and $150 million in convertible notes.

Goldman Sachs Group Inc., Citigroup Inc., Bank of America Corp. and JPMorgan Chase & Co. are jointly running the stock and notes offerings for American.

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