AA to sell $250 million of convertible notes

FWAAA

Veteran
Jan 5, 2003
10,249
3,893
This is good news; AA is stockpiling cash for the winter. Everyone who wishes Ch 11 on AA, you''ll just have to wait.

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AMR Announces Proposed Issue of Convertible Notes

Monday August 4, 7:32 am ET


FORT WORTH, Texas, Aug. 4 /PRNewswire/ -- AMR Corp. (NYSE: AMR - News), the parent company of American Airlines, Inc., today announced its intention to sell, subject to market and other conditions, $250 million issue price of convertible notes due 2023, to qualified institutional buyers in a private placement pursuant to Rule 144A under the Securities Act of 1933 (the Securities Act). The initial purchasers are expected to have an option to purchase an additional $50 million issue price of the notes.

AMR said the notes are to be guaranteed by American Airlines, Inc. AMR plans to use the net proceeds from the offering for working capital and general corporate purposes.

This announcement is neither an offer to sell nor a solicitation to buy any of these notes and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale is unlawful.

The notes being offered and the common stock issuable upon conversion of the notes have not been registered under the Securities Act, or any state securities laws, and may not be offered or sold in the United States absent registration under, or an applicable exemption from, the registration requirements of the Securities Act and applicable state securities laws.
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I agree. If you were thinking of buying AMR stock, this may be a good time to do it, for at least two reasons:

1. Sale of convertible bonds usually puts downward pressure on the stock price, at least in the near term, as investors who have bought the convertible bonds also short-sell the stock as a hedge. Last I checked, the stock was down 7% today.

2. The likelihood of AA filing bankruptcy, at least for the next year or so, is virtually nil (AMR wouldn't be issuing convertible bonds if they were going to file - that's a strong "no BK" signal).
 

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