United Mileage changes term loan B OID to 98, upsizes to $3 billion

By Sara Rosenberg

New York, June 25 – United Mileage Plus tightened the original issue discount on its seven-year first-lien term loan B (Baa3//BBB-) to 98 from 97 and then upsized the loan to $3 billion from $2 billion, according to a market source.

Also, pricing finalized late in the day at Libor plus 525 basis points, the low end of the Libor plus 525 bps to 550 bps talk, the source said.

The term loan still has a 1% Libor floor and is non-callable for three years, then at 104 in year four and 102 in year five.

Amortization is 20% per annum beginning in year three.

The loan has an interest-only period of two years and an expected weighted average life of 4.7 years.

Covenants include minimum liquidity of at least $2 billion maintained by the parent.

All revenues of Mileage Plus Holdings LLC and its subsidiaries will be required to be deposited into a collection account pledged to secure the issuance on a first-priority basis.

Amounts received in the collection account will be applied first to pay agents’ fees and expenses, second to pay interest and quarterly amortization, third to fund the reserve account up to the debt service reserve account required balance, fourth, if an early amortization event exists, 50% of all amounts that have been trapped to pay outstanding principal, and fifth, if no early amortization event or default or event of default exists, all remaining amounts will be remitted to the co-borrowers.

The reserve account will be the equivalent of three months of interest service funded upfront.

Goldman Sachs Bank USA, Barclays and Morgan Stanley Senior Funding Inc. are the lead arrangers on the deal.

With the announcement of the original issue discount change in the morning, the commitment deadline was accelerated to 1:30 p.m. ET on Thursday from noon ET on Friday. And, with the upsizing announcement in the afternoon, the commitment deadline was revised to 2:30 p.m. ET on Thursday, the source added.

Proceeds will be used with $3.8 billion of senior secured notes, upsized from $3 billion, to refinance a bridge facility, to fund the notes reserve account and the reserve account for the term loan, and to make an intercompany loan to United Airlines Inc. that will be used for general corporate purposes.

Closing is expected during the week of June 29.

Mileage Plus is the loyalty program of United Airlines, a Chicago-based airline company.

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