AAdvantage launches $2.5 billion term loan at Libor plus 500-525 bps

By Sara Rosenberg

New York, March 8 – Aadvantage Loyalty IP Ltd. (American Airlines Inc.) held a lender call at 1 p.m. ET on Monday to launch a $2.5 billion seven-year senior secured term loan (//BB) that is talked at Libor plus 500 basis points to 525 bps with a 1% Libor floor and an original issue discount of 98, according to a market source.

The term loan is non-callable for three years, then at 104 in year four and 102 in year five, the source said.

Also, the term loan is interest only for two years and then has amortization of 20% per annum beginning in year three.

Expected weighted average life is 4.7 years.

Barclays, Goldman Sachs Bank USA and Citigroup Global Markets Inc. are the lead bookrunners on the deal. Other bookrunners include BofA Securities Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., ICBC, JPMorgan Chase Bank, Morgan Stanley Senior Funding Inc., SMBC, BNP Paribas Securities Corp., Credit Agricole, HSBC Securities (USA) Inc., MUFG, Standard Chartered, US Bancorp and BOK. Barclays is the administrative agent.

Commitments are due at noon ET on Thursday, the source added.

Proceeds will be used with $2.5 billion of senior secured notes due 2026 and $2.5 billion of senior secured notes due 2029 to fund the notes reserve account for the notes and the reserve account for the new term loan and to make an intercompany loan to American Airlines. American intends to use the proceeds from the intercompany loan to repay all amounts outstanding under its Treasury term loan and for general corporate purposes.

AAdvantage is American Airlines’ customer loyalty program. American Airlines is a Fort Worth, Tex.-based airline company.

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