9 February 2017

Air Berlin announces an exchange offer for its convertible bonds due in 2019 and seeks to raise an additional amount of up to EUR 85 million by the issuance of new convertible bonds

London, 9 February 2017 – Air Berlin PLC (the “Guarantor”) announces that its subsidiary Air Berlin Finance B.V. (the “Offeror”) invites holders of its EUR 140 million outstanding 6.00% Guaranteed Convertible Bonds due 2019 (ISIN DE000A1HGM38) convertible into ordinary registered shares of the Guarantor at a conversion price currently set at EUR 2.11 (the “Original Bonds”) to offer to exchange such Original Bonds for new Euro denominated 8.50 per cent. Guaranteed Convertible Bonds due 2019 (the “New Bonds” and the “Exchange Offer”). The Offeror also intends to raise an additional amount of up to EUR 85 million (the “Target Issue Size”) from the offering of New Bonds outside the Exchange Offer (the “Offering”).

 

Rationale

The Offeror is seeking to refinance any or all of the Original Bonds in the light of the Guarantor’s separately announced business plans. Management of the Guarantor is seeking the Exchange Offer and Offering due to its desire to maintain convertible bonds within its sources of financing, increase financial flexibility, preserve its working capital and to provide it with additional financial flexibility to pursue its “new airberlin” strategy. Deferral of the put date under the Original Bonds until the end of 2017 will allow it to do so, whilst the maturity date will remain unchanged. Holders of the Original Bonds participating in the Exchange Offer will be entitled to receive an enhanced coupon and more attractively priced conversion rights.

 

Exchange Offer

On the terms and subject to the conditions set out in the Exchange Offer Term Sheet dated 9 February 2017, the Offeror invites all Bondholders (subject to the offer restrictions set out in the Exchange Offer Term Sheet) to offer to exchange any or all of their Original Bonds for New Bonds.

Original Bonds validly offered for exchange by a Bondholder and accepted pursuant to the terms of the Exchange Offer will be exchanged on the Settlement Date (as defined below) for an amount of New Bonds calculated by reference to a 1:1 exchange ratio. The Offeror will also pay such Bondholder on the Settlement Date (as defined below) an Accrued Interest Payment.

The Exchange Offer commences on the date hereof and all offers to exchange Original Bonds must be received by Clearstream Banking AG (“Clearstream Frankfurt”) no later than 4 p.m. (CET) on 17 February 2017 (the “Expiration Deadline”), unless the period for the Exchange Offer is extended or re-opened or the Exchange Offer is terminated by the Offeror. Bondholders are advised that the deadlines set by any such intermediary (including any direct participant in Clearstream Frankfurt) are likely to be earlier than the relevant deadlines specified above.

The Offeror will announce on or prior to 8 a.m. (CET) on 20 February 2017 its decision whether to accept valid offers of Original Bonds for exchange pursuant to the Exchange Offer. If so accepted, the Offeror will also announce (i) the final aggregate principal amount of Original Bonds accepted for exchange and (ii) the aggregate principal amount of New Bonds to be issued (including New Bonds to be issued in the Offering).

Exchange instructions will be irrevocable. Any Original Bonds that are not successfully offered for exchange pursuant to the Exchange Offer will remain outstanding.

Bondholders are advised to read the Exchange Offer Term Sheet and the terms and conditions of the New Bonds annexed thereto in their entirety prior to making a decision on whether or not to participate in the Exchange Offer.

HSBC Bank plc (“HSBC”) is acting as Dealer Manager in respect of the Exchange Offer. Deutsche Bank AG, London Bank is acting as Exchange Agent in respect of the Exchange Offer.

 

The Offering

The New Bonds will have a coupon of 8.50 per cent. per annum (payable quarterly in arrear) and the initial conversion price will be set at EUR 1.15, subject to customary anti-dilution adjustments. Holders of the New Bonds will have a right to require the Offeror to redeem the New Bonds on 29 December 2017 at their principal amount plus accrued interest. The New Bonds will be issued in denominations of EUR 100,000.

The Guarantor intends to use the net proceeds of the Offering for refinancing (including payment of redemption amounts of any Original Bonds on the put date of 6 March 2017 in accordance with their terms) and general corporate purposes. New Bonds issued in the Offering will be fungible with New Bonds issued pursuant to the Exchange Offer.

The Offeror and the Guarantor intend to apply for the New Bonds to be admitted to trading on the Quotation Board segment of the Open Market (Freiverkehr) of the Frankfurt Stock Exchange. Each of the Offeror and the Guarantor has agreed to a lock-up for three months from the Settlement Date (as defined below), subject to customary exemptions.

The issue and settlement of the New Bonds (issued in respect of the Exchange Offer and the Offering) is expected to occur on or around 22 February 2017 (the “Settlement Date”).

HSBC is acting as Sole Global Coordinator and Sole Bookrunner in respect of the Offering. ADS Securities LLC is acting as Co-Lead Manager in respect of the Offering.

 

Supporting Shareholder

Etihad Airways P.J.S.C. has notified Air Berlin Finance B.V. that it intends to offer its entire holding of EUR 40 million of Original Bonds for exchange into the New Bonds.

Furthermore, in order to support the Offering, Etihad Airways P.J.S.C. will enter into a total return swap with HSBC, who acts as Dealer Manager, Sole Global Coordinator and Sole Bookrunner, in respect of a proportion of the New Bonds. The notional amount of the New Bonds that will be subject to the total return swap will be determined following the Expiration Deadline in order to achieve the overall Target Issue Size. The Sole Bookrunner will purchase New Bonds pursuant to the Offering corresponding to the notional amount of the total return swap.

About airberlin

As one of Europe's largest network airlines, airberlin focuses on extremely frequent domestic flights and on services between a number of major European cities and its Berlin-Tegel and Dusseldorf hubs, from where the airline also operates long-haul flights to the US, Caribbean and Middle East. airberlin carried more than 30.2 million passengers in 2015 and its fleet is among the most modern and eco-efficient in Europe. airberlin is a member of the oneworld® airline alliance, co-founder of Etihad Airways Partners and a strategic partner of Etihad Airways, which has a 29.21 per cent share in airberlin. topbonus, the frequent flyer programme of airberlin, has more than 4 million members.

 

Press contact:

airberlin Corporate Communications

Tel.: +49 30 3434 1500

Email: abpresse@airberlin.com

www.airberlin.com

 

Further Information

Requests for information in relation to the terms of the Exchange Offer should be directed to:

HSBC Bank plc

8 Canada Square

Canary Wharf

London E14 5HQ

Email:   tony.sand@hsbcib.com / dan.kosary@hsbc.com

Telephone:       +44 (20) 7991-5271

Attention:         Equity Syndicate

Requests for information in relation to the procedures for offering for exchange Original Bonds in, and for any documents or materials relating to, the Exchange Offer should be directed to:

Deutsche Bank AG, London Branch

Winchester House

1 Great Winchester Street

London EC2N 2DB

United Kingdom

Email:   xchange.offer@db.com    

Telephone:       +44 20 7547 5000

Fax:                 +44 20 7547 5001

Attention:         GSS-Corporate Trust, Debt & Agency Services

 

Important Notice

NOT FOR DISTRIBUTION IN OR INTO THE UNITED STATES OR IN OR INTO AUSTRALIA, CANADA, JAPAN, SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH DISTRIBUTION WOULD BE PROHIBITED BY APPLICABLE LAW.

THIS PRESS RELEASE IS NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY IN OR INTO THE UNITED STATES OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE U.S. SECURITIES ACT OF 1933 (THE “SECURITIES ACT”)). THIS PRESS RELEASE IS NOT AN OFFER TO SELL OR EXCHANGE SECURITIES OR THE SOLICITATION OF ANY OFFER TO BUY OR EXCHANGE SECURITIES, NOR SHALL THERE BE ANY OFFER OF SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SALE WOULD BE UNLAWFUL.

The Exchange Offer AND THE OFFERING ARE not being and will not be made, directly or indirectly, in or into, or by use of mails or any means or instrumentality (including, without limitation, facsimile transmission, telephone and internet) of interstate or foreign commerce of, or any facilities of a national securities exchange of, the United States, and the Exchange Offer AND THE OFFERING will not be capable of acceptance by any such use, means, instrumentality or facilities or from within the United States.

THIS PRESS RELEASE, THE EXCHANGE OFFER AND THE OFFERING WHEN MADE ARE ONLY ADDRESSED TO, AND DIRECTED IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA (THE “EEA”) AT PERSONS WHO ARE “QUALIFIED INVESTORS” WITHIN THE MEANING OF ARTICLE 2(1)(E) OF THE PROSPECTUS DIRECTIVE (“QUALIFIED INVESTORS”). FOR THESE PURPOSES, THE EXPRESSION "PROSPECTUS DIRECTIVE" MEANS DIRECTIVE 2003/71/EC, AS AMENDED.

IN ADDITION, IN THE UNITED KINGDOM THIS PRESS RELEASE IS BEING DISTRIBUTED ONLY TO, AND IS DIRECTED ONLY AT, QUALIFIED INVESTORS (I) WHO HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS FALLING WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005, AS AMENDED (THE “ORDER”) AND QUALIFIED INVESTORS FALLING WITHIN ARTICLE 49(2)(A) TO (D) OF THE ORDER, AND (II) TO WHOM IT MAY OTHERWISE LAWFULLY BE COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS “RELEVANT PERSONS”). THIS PRESS RELEASE MUST NOT BE ACTED ON OR RELIED ON (I) IN THE UNITED KINGDOM, BY PERSONS WHO ARE NOT RELEVANT PERSONS, AND (II) IN ANY MEMBER STATE OF THE EEA OTHER THAN THE UNITED KINGDOM, BY PERSONS WHO ARE NOT QUALIFIED INVESTORS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS PRESS RELEASE RELATES IS AVAILABLE ONLY TO (A) RELEVANT PERSONS IN THE UNITED KINGDOM AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS IN THE UNITED KINGDOM AND (B) QUALIFIED INVESTORS IN MEMBER STATES OF THE EEA (OTHER THAN THE UNITED KINGDOM).

EACH INVESTOR SHOULD NOTE THE SECTION OF THE EXCHANGE OFFER TERM SHEET ENTITLED “OFFER RESTRICTIONS” AND CONFIRM THAT IT IS ABLE TO PARTICIPATE IN THE EXCHANGE OFFER IN COMPLIANCE WITH SUCH OFFER RESTRICTIONS.

ANY DECISION TO EXCHANGE ANY ORIGINAL BONDS OR PURCHASE ANY NEW BONDS SHOULD ONLY BE MADE ON THE BASIS OF AN INDEPENDENT REVIEW BY A PROSPECTIVE INVESTOR OF THE OFFEROR’S AND THE GUARANTOR’S PUBLICLY AVAILABLE INFORMATION. NEITHER THE DEALER MANAGER, THE EXCHANGE AGENT NOR ANY OF THEIR RESPECTIVE AFFILIATES ACCEPT ANY LIABILITY ARISING FROM THE USE OF, OR MAKE ANY REPRESENTATION AS TO THE ACCURACY OR COMPLETENESS OF, THIS PRESS RELEASE OR THE OFFEROR’S AND THE GUARANTOR’S PUBLICLY AVAILABLE INFORMATION. THE INFORMATION CONTAINED IN THIS PRESS RELEASE IS SUBJECT TO CHANGE IN ITS ENTIRETY WITHOUT NOTICE UP TO THE SETTLEMENT DATE.

EACH INVESTOR AND PROSPECTIVE INVESTOR SHOULD PROCEED ON THE ASSUMPTION THAT IT MUST BEAR THE ECONOMIC RISK OF AN INVESTMENT IN THE NEW BONDS OR THE ORDINARY SHARES TO BE ISSUED OR TRANSFERRED AND DELIVERED UPON CONVERSION OF THE NEW BONDS AND NOTIONALLY UNDERLYING THE NEW BONDS (TOGETHER WITH THE NEW BONDS, THE “SECURITIES”). NONE OF THE OFFEROR, THE GUARANTOR, THE DEALER MANAGER OR THE EXCHANGE AGENT MAKE ANY REPRESENTATION AS TO (I) THE SUITABILITY OF THE SECURITIES FOR ANY PARTICULAR INVESTOR, (II) THE APPROPRIATE ACCOUNTING TREATMENT AND POTENTIAL TAX CONSEQUENCES OF INVESTING IN THE SECURITIES OR (III) THE FUTURE PERFORMANCE OF THE SECURITIES EITHER IN ABSOLUTE TERMS OR RELATIVE TO COMPETING INVESTMENTS.

THE DEALER MANAGER AND THE EXCHANGE AGENT ARE ACTING ON BEHALF OF THE OFFEROR AND THE GUARANTOR AND NO ONE ELSE IN CONNECTION WITH THE EXCHANGE OFFER, THE OFFERING AND THE NEW BONDS AND WILL NOT BE RESPONSIBLE TO ANY OTHER PERSON FOR PROVIDING THE PROTECTIONS AFFORDED TO CLIENTS OF THE DEALER MANAGER AND THE EXCHANGE AGENT OR FOR PROVIDING ADVICE IN RELATION TO THE SECURITIES.

EACH OF THE OFFEROR, THE GUARANTOR, THE DEALER MANAGER, THE EXCHANGE AGENT AND THEIR RESPECTIVE AFFILIATES EXPRESSLY DISCLAIMS ANY OBLIGATION OR UNDERTAKING TO UPDATE, REVIEW OR REVISE ANY STATEMENT CONTAINED IN THIS PRESS RELEASE WHETHER AS A RESULT OF NEW INFORMATION, FUTURE DEVELOPMENTS OR OTHERWISE.

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airberlin Press office

Phone: +49 (0)30 3434 1500

press@airberlin.com