AAdvantage lifts loan to $3.5 billion, flexes to Libor plus 475 bps

By Sara Rosenberg

New York, March 10 – AAdvantage Loyalty IP Ltd. (American Airlines Inc.) upsized its seven-year senior secured term loan to $3.5 billion from $2.5 billion and reduced pricing to Libor plus 475 basis points from talk in the range of Libor plus 500 bps to 525 bps, according to a market source.

Also, the Libor floor on the term loan was lowered to 0.75% from 1% and the original issue discount talk was revised to a range of 98.5 to 99 from 98, before finalizing at 99 later in the day, the source said.

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

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, U.S. Bancorp and BOK. Barclays is the administrative agent.

Commitments were scheduled to be due at noon ET on Wednesday, the source added.

Proceeds will be used with $3.5 billion of senior secured notes due 2026, upsized from $2.5 billion, and $3 billion of senior secured notes due 2029, upsized from $2.5 billion, to fund the 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-based airline company.

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