A proposal by IAG to raise €2.75 billion ($3.21 billion), via a rights issue is a “positive” development that will improve the airline group’s leverage and liquidity, but significant challenges remain, Moody’s Investor Service believes. 

IAG has entered into a standby underwriting agreement for up to €2.75 billion, less the Qatar Airways entitlement that is subject to the irrevocable undertaking, with Goldman Sachs, Morgan Stanley and Deutsche Bank in connection with the proposed capital increase.

The three banks are joint global coordinators of the rights issue, which will be put to a shareholder vote on 8 September. Joint Sponsors (as to Admission of Subscription Rights and Admission on the London Stock Exchange), Joint Global Coordinators and Joint Bookrunners are Goldman Sachs International and Morgan Stanley. Joint Global Coordinator and Joint Bookrunner is Deutsche Bank. Joint Bookrunners are Banco Bilbao Vizcaya Argentaria, S.A. Banco Santander S.A., Barclays Bank PLC, BofA Securities, Citigroup Global Markets Limited, Credit Suisse.

Update : On 8 September, shareholders approved the €2.74 billion ($3.26 billion) capital increase that saw the issuance of 2,979,443,376 new shares in IAG.