Delta starts telephone roadshow for $4 billion two-part bullet deal

By Paul A. Harris

Portland, Ore., Sept. 14 – Delta Air Lines Inc. and SkyMiles IP Ltd. began a telephone roadshow on Monday for a $4 billion two-part offering of senior secured bullet notes, according to market sources.

The marketing of the Rule 144A and Regulation S for life deal will involve both the high-yield and investment-grade syndicate desks.

The offering features $2 billion of five-year notes that feature 33% annual amortization beginning in year three, with a 3.7-year average weighted life. It also features $2 billion of eight-year notes that feature 33% annual amortization beginning in year six, with a 6.7-year average weighted life.

Initial talk has the five-year notes coming to yield in the 5% area and the eight-year notes coming to yield in the 5 3/8% area.

The roadshow runs through Thursday, and the notes are set to price thereafter.

Goldman Sachs & Co. LLC is the left lead bookrunner. Barclays, J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC are the joint lead bookrunners.

BofA Securities Inc., BBVA Securities Inc., BNP Paribas Securities Corp., Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Fifth Third Securities Inc., PNC Capital Markets LLC, SMBC Nikko Securities America Inc., Standard Chartered Bank, U.S. Bancorp Investments Inc. and Wells Fargo Securities LLC are the joint bookrunners.

Credit Agricole CIB and Natixis Securities Americas LLC are the co-managers.

Features of the credit agreement include a collection account into which SkyMiles and its subsidiaries will be required to deposit all revenues pledged to secure the notes on a first-priority basis, subject to a simplified waterfall provision.

The agreement specifies a reserve account equivalent to three months of interest service, to be funded up front.

The parent is required to maintain minimum liquidity of at least $2 billion.

Proceeds, together with a new term loan, will be used to fund the reserve accounts and for SkyMiles IP to make a distribution to SkyMiles IP Finance, which will in turn make a distribution to SkyMiles IP Holdings, which will in turn make an intercompany loan to Delta, which intends to use the proceeds for general corporate purposes and to support its liquidity position.

Delta is an Atlanta-based air carrier.

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