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American Airlines launches $750 million loan at SOFR plus 350-375 bps
By Sara Rosenberg
New York, Nov. 14 – American Airlines Inc. was scheduled to hold a lender call at 1 p.m. ET on Tuesday to launch a $750 million 5.5-year term loan B (Ba2/BB/BB-) that is talked at SOFR plus 350 basis points to 375 bps with a 0% floor and an original issue discount of 98.5, according to a market source.
The term loan has 101 soft call protection for six months, the source said.
Maintenance covenants include a minimum collateral coverage ratio of 1.6x (62.5% LTV), tested twice a year, and minimum unrestricted liquidity of $2 billion.
Security is a first priority lien on certain SGR for scheduled services from U.S. airports (other than DCA and LGA) to certain airports in Australia, Canada, the Caribbean, Central America, China, Hong Kong, Japan, Mexico, South Korea, and Switzerland, with a second priority lien on certain SGR for scheduled services from U.S. airports (other than DCA and LGA) to LHR and certain airports in the European Union that will be automatically released upon the satisfaction and discharge of all existing notes collateral, the source continued.
Also, substitution is not permitted. First-lien SGR “core collateral” assets cannot be released from the collateral package.
There is a collateral appraisal delivery requirement of twice per year.
Citigroup Global Markets Inc., BofA Securities Inc. and Morgan Stanley Senior Funding Inc. are the joint lead arrangers on the deal, with Citi the sole structuring agent and administrative agent.
Commitments are due at noon ET on Friday, the source added.
Proceeds will be used with other pari passu secured debt to partially refinance existing 11¾% secured notes due 2025 and to pay related transaction fees and expenses.
Closing is expected during the week of Nov. 27.
American Airlines is a Fort Worth-based airline company.
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