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American Airlines Proposes Offer for $5.0 Billion in Senior Secured Notes and New $2.5 B Term Loan

American Airlines and AAdvantage Loyalty IP, Ltd., a newly formed Cayman Islands company, have announced a proposed offering of $5.0 billion in senior secured notes, half due in 2026 and the other half in 2029, as well as a new $2.5 billion secured term loan credit facility.

American Airlines Boeing 737NG - Courtesy American Airlines

On Monday (March 8, 2021), American Airlines announced the proposed offering of senior secured notes and a new term loan facility by the company and AAdvantage Loyalty IP Ltd., a newly formed Cayman Islands exempt company and indirect wholly-owned subsidiary. The proposal includes a private offering of $2.5 billion in senior secured notes due 2026, as well as an additional $2.5 billion due in 2019. The company also plans on entering into a new $2.5 billion senior secured term loan credit facility (the New AAdvantage Term Loan Facility”), concurrent with the closing of the offering of the notes. Both American Airlines and AAdvantage Loyalty IP Ltd. will be co-issuers of the Notes as well as co-borrowers under the New AAdvantage Term Loan Facility, and both will be guaranteed by the company and certain subsidiaries.

The Notes and new term loan facility will be secured on a pari passu senior basis by a first-priority security interest in American Airlines’ AAdvantage loyalty program, including the company’s rights under certain related agreements, intellectual property and other AAdvantage related collateral. AAdvantage Loyalty IP Ltd. intends to lend the net proceeds from the Notes offering and New AAdvantage Term Loan Facility to American Airlines. The company will then use the proceeds to repay all outstanding amounts under the term loan facility with the U.S. Department of the Treasury that is currently secured by collateral that will secure (in-part) the Notes and new term loan facility. The remainder will be used for general corporate purposes, potentially including the payment of other debts.

American Airlines’ purpose is to “care for people on life’s journey.” Shares in the American Airlines Group, Inc., trade on NASDAQ under the ticker symbol AAL and the company’s stock is included in the S&P 500.

Source: American Airlines


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