Continental Airlines (CAL) announced that it will be selling $200 million of convertible notes due 2015. Interest on the notes will be payable on Jan 15 and Jul 15 of each year, beginning on Jul 15, 2010. The notes will be unsubordinated, unsecured obligations of Continental Airlines and will rank at par with all other unsubordinated, unsecured debt.

The underwriters to the issue have been granted an option to purchase up to an additional $30 million of principal amount of notes. The notes will not be listed on any securities exchange.

The net proceeds from the offering of the notes will be used for general corporate purposes, which include the repayment of existing debt, funding of a portion of pension liabilities, and meeting working capital requirements.

Morgan Stanley & Co. Incorporated (MS), Credit Suisse Securities (CS), Goldman, Sachs & Co. (GS), Citigroup Global Markets Inc. (C) and UBS Securities (UBS) are the joint book-running managers for this offering.

During the third quarter, the airline reported core earnings of $2 million or 2 cents on a per share basis. Revenues remained weak with mainline RASM (revenue per available seat mile) down 19.1% and regional RASM down 10.9% year-over-year. The air carrier experienced weak yields and high load factors generated by the low fares caused by the recession.

A number of airlines have adopted a similar measure with peer American Airlines (AMR) issuing $250 million in debt during September, followed by Delta Airlines (DAL) and UAL Corp.(UAUA), who raised debts of $1.35 billion and $810 million, respectively, through issuing of notes.

Zacks Investment Research

1. (C) Citigroup Issues $1.875 Billion in NotesCitigroup Inc. (C) yesterday announced the sale of $1.875 billion worth of senior remarketing notes....
2. (UAUA) United Airlines’ Parent UAL Corporation Raises FundsUAL Corporation (UAUA), the parent company of United Airlines, has announced the issue of $810...
3. (UAUA) United Airlines’ Parent Company Plans to Raise FundsUAL Corp. (UAUA), the parent company of United Airlines, has announced a new public offering...
4. (C) Citigroup Issues Senior NotesOn Thursday, Citigroup Inc. (C) sold 5-year senior notes worth $2.0 billion. The notes are...
5. (MS) Morgan Stanley Issues Senior NotesOn Sep 16, Morgan Stanley (MS) sold 10-year senior notes worth $3 billion that are...
6. (TXT) Textron Issues $600 Million in NotesOn Sep 14, 2009, Textron Inc. (TXT) sold notes in two parts worth $600 million....

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