By Paul A. Harris
Portland, Ore., Jan. 28 – Hawaiian Airlines priced an upsized $1.2 billion issue of 5¾% five-year first-lien senior secured notes (Ba3//B+) at 99.449 to yield 5 7/8% on Thursday, according to market sources.
The oversubscribed deal was upsized from $800 million.
The offering priced at the tight end of yield talk in the 6% area.
Lead bookrunner Barclays was the structuring agent. Joint bookrunners were Goldman Sachs & Co. LLC, BNP Paribas Securities Corp., Citigroup Global Markets Inc. and Morgan Stanley & Co. LLC.
The notes become callable after three years at par plus 50% of the coupon.
The notes were issued via Hawaiian Brand Intellectual Property, Ltd. and HawaiianMiles Loyalty, Ltd.
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 are 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.
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. The additional proceeds resulting from the $400 million upsizing of the deal will be used for liquidity enhancement.
The Honolulu-based commercial airline 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.
| Issuers: | Hawaiian Brand Intellectual Property, Ltd. and HawaiianMiles Loyalty, Ltd.
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| Amount: | $1.2 billion, increased from $800 million
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| Maturity: | Jan. 20, 2026
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| Securities: | Senior secured notes
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| Lead bookrunner: | Barclays (structuring agent)
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| Joint bookrunners: | Goldman Sachs & Co. LLC, BNP Paribas Securities Corp., Citigroup Global Markets Inc. and Morgan Stanley & Co. LLC
|
| Coupon: | 5¾%
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| Price: | 99.449
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| Yield: | 5 7/8%
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| Spread: | 547 bps
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| First call: | Jan. 20, 2024 at par plus 50% of coupon
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| Trade date: | Jan. 28
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| Settlement date: | Feb. 4
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| Ratings: | Moody's: Ba3
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| Fitch: B+
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| Distribution: | Rule 144A and Regulation S for life
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| Price talk: | 6% area
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| Marketing: | Roadshow
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