Air Canada to raise $260M in new equity

Air Canada has signed a deal to raise $260 million in new capital.

The airlinewill sell 160.5 million units priced at $1.62 each to raise money for day-to-day activities.

Sellers led by Genuity Capital Markets and TD Securities Inc. have bought theunits in advance, meaning they will shoulder any costs if they can't be sold.

The companiesalso have the optionof buyingup to 24.1 million more units if they have demand. That would raise another $39 million for the airline.

Each unit will include one class B voting share or one class A variable voting share, plus half a warrant. A warrant givesthe buyer the rightto purchase a share for$2.20 for three years after the offering closes.Both the Air Canada class A and class B sharesweretrading on the Toronto Stock Exchange Tuesday at$1.84.

Earlier this year, some analysts expressed concern Air Canada would have to seek court protection from creditors because it was running short of cash, butin Julythe airline successfullyraised $1.02 billion.