Jazz Air Income Fund Announces $50 Million Offering of Convertible Debentures



HALIFAX, Oct. 22 /CNW/ – Jazz Air Income Fund ("Jazz" or the "Fund'") (TSX:JAZ.UN) announced today that it has entered into an agreement to sell to a group of underwriters led by TD Securities, BMO Capital Markets, CIBC and RBC Capital Markets, $50 million principal amount of 9.50% convertible unsecured subordinated debentures (the "Debentures"). The Fund has granted the Underwriters an option, exercisable in whole or in part at any time up until 30 days after the Closing Date, to purchase an additional $7.5 million principal amount of Debentures, at the same price. If the Over-allotment Option is exercised in full, the total gross proceeds of the financing will be $57.5 million. Proceeds from the Offering will be used for working capital requirements and for general purposes of the Fund.

The Debentures will bear interest at a rate of 9.50% per annum payable semi-annually in arrears on June 30 and December 31 in each year commencing on June 30, 2010, and will mature on December 31, 2014 (the "Maturity Date"). The Debentures will be convertible at the holder's option into trust units of Jazz at any time prior to the earlier of the Maturity Date and the date fixed for redemption at a conversion price of $5.25 per trust unit (the "Conversion Price"). The Debentures will not be redeemable on or before December 31, 2012. After December 31, 2012 and prior to December 31, 2013, the Debentures may be redeemed in whole or in part from time to time at Jazz's option at a price equal to their principal amount plus accrued interest, provided that the volume weighted average trading price for the trust units is not less than 125% of the Conversion Price. On and after December 31, 2013 and prior to the Maturity Date, the Debentures may be redeemed in whole or in part from time to time at Jazz's option at a price equal to their principal amount plus accrued interest. Subject to regulatory approval, Jazz may satisfy its obligation to repay the principal amount of the Debentures on redemption or at maturity, in whole or in part, by delivering that number of trust units equal to the amount due divided by 95% of the market price for the units at that time, plus accrued interest in cash.

The offering will be made in all provinces and territories of Canada and is expected to close on or about November 12, 2009, subject to regulatory approval. The trust units and Debentures have not been and will not be registered under the United States Securities Act of 1933 and may not be offered or sold in the United States absent registration or applicable exemption from the registration requirement of such Act. This news release is not an offer of securities for sale in the United States.


Caution Regarding Forward Looking Information


Certain statements in this news release may contain forward-looking statements. These forward-looking statements are identified by the use of terms and phrases such as "anticipate", "believe", "could", "estimate", "expect", "intend", "may", "plan", "predict", "project", "will", "would", and similar terms and phrases, including references to assumptions. Such statements may involve but are not limited to comments with respect to strategies, expectations, planned operations or future actions. Forward-looking statements, by their nature, are based on assumptions and are subject to important risks and uncertainties. Any forecasts or forward-looking predictions or statements cannot be relied upon due to, amongst other things, changing external events, general uncertainties of the business and matters that are not within the control of Jazz. Such statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements to differ materially from those expressed in the forward-looking statements. The forward-looking statements contained herein represent Jazz's expectations as of the date they are made and are subject to change after such date. However, Jazz disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required under applicable securities regulations.


About Jazz Air Income Fund


The Fund is an unincorporated, open-ended trust established under the laws of the Province of Ontario, created to indirectly acquire and hold an interest in the outstanding limited partnership units of Jazz.

Jazz is the second largest airline in Canada based on fleet size and the number of routes operated. Jazz operates more flights and flies to more Canadian destinations than any other Canadian carrier. Jazz forms an integral part of Air Canada's domestic and transborder market presence and strategy.

Jazz is not a typical airline. The airline has a commercial agreement with Air Canada that is the core of its business. Under the CPA, Air Canada currently purchases substantially all of Jazz's fleet capacity based on predetermined rates. The CPA provides commercial flexibility, low trip costs and connecting network traffic to Air Canada.