MADRID/LONDON, May 14 (Reuters) - The International Airlines Group said on Tuesday it would issue up to 400 million euros ($519.3 million)of convertible bonds to help fund the purchase of low-cost carrier Vueling and boost IAG's working capital.
The bonds, which mature in 2018, can be converted into ordinary shares in the company, home to British Airways and loss-making Spanish flag carrier Iberia. IAG said it expected bookbuilding to be completed on Tuesday.
IAG said some of the money raised would go towards paying off bridge loans from its British arm and Banco Santander used to acquire Vueling for 123.5 million euros.
Chief Executive Willie Walsh said in a statement that the airline would be 'a great addition to IAG', adding that the bond issue would also bolster liquidity and IAG's credit profile.
The company took control of Vueling in April, raising its stake in the company to over 90 percent from 46 percent in a takeover that valued the Barcelona-based carrier at 277 million euros.
IAG is in the painful process of restructuring Iberia and has reached an agreement with unions to lay off more than 3,000 staff after months of intermittent strikes. The acquisition should help IAG improve its short-haul business and offset Iberia's losses.
IAG said the bond conversion price would be set at a premium of between 30 and 35 percent. IAG said it had appointed Banco Santander, Barclays, Deutsche Bank AG's London branch, Morgan Stanley and UBS as joint bookrunners and joint lead managers.
($1 = 0.7703 euros)
(Reporting by Clare Kane; Editing by Tom Pfeiffer) Keywords: IAG BONDS/
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