Hawaiian Airlines selling $800 million secured notes backed by customer loyalty program

By Paul A. Harris

Portland, Ore., Jan. 26 – Hawaiian Airlines became the latest commercial air carrier to taxi up to the high-yield gate on Tuesday with a junk bond deal backed by assets related to its customer loyalty program, hoping to raise capital to help it weather the catastrophic impact of the Covid-19 pandemic on global travel.

On Tuesday the Honolulu-based carrier announced it would attempt to place $800 million of five-year first-lien senior secured notes (//B+) by means of a global investor conference call starting at 11 a.m. ET on Wednesday, to be followed by a virtual roadshow throughout the day.

Issuing via HawaiianMiles Loyalty, Ltd. and Hawaiian Brand, the deal is backed by security including first priority interest in the cash revenue from the HawaiianMiles loyalty program and intellectual property related to HawaiianMiles, as well as Hawaiian’s brand intellectual property.

Bond investors will be protected by an annual appraisal of collateral backing the bonds, to be conducted each April.

A special interest rate trigger provision would increase the rate on notes by 2% if the loan-to-value ratio exceeds 62.5%, and continue to pay the higher rate until the ratio does not exceed that threshold.

The Rule 144A and Regulation S for life deal is set to price on Thursday.

Barclays, Goldman Sachs & Co. LLC, BNP Paribas Securities Corp., Citigroup Global Markets Inc. and Morgan Stanley & Co. LLC are the joint bookrunners.

The notes become callable after three years at par plus 50% of the coupon.

Proceeds will be used to refinance the existing Coronavirus Aid, Relief and Economic Security (CARES) Act Economic Relief Program loan and further enhance the airline's liquidity position.

Hawaiian Airlines joins United Airlines, American Airlines and Delta Air Lines, each of which brought bond deals backed by collateral related to their respective customer loyalty programs in 2020.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.