By Paul A. Harris
Portland, Ore., Sept. 2 – Spirit Airlines, Inc. priced an upsized $850 million issue of 8% five-year first-lien senior secured notes (Ba3//BB+) at 98.976 to yield 8¼% on Wednesday, according to market sources.
The issue size increased from $600 million.
The yield came at the tight end of the 8¼% to 8½% yield talk, which also specified an original issue discount. Initial guidance was in the 8¾% area.
Lead bookrunner Barclays was the sole structuring agent. Joint lead bookrunners were Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and Morgan Stanley & Co. LLC.
There is a special interest rate trigger that will increase the coupon by 2% if the loan-to-value ratio exceeds 62.5%. The higher rate remains in place until the LTV ratio falls below that threshold. Valuation is set to be tested semiannually.
The notes are secured on a first priority basis by the cash revenue from Spirit’s co-branded credit card programs and $9 Fare Club, intellectual property required or necessary to operate Spirit’s loyalty program, Spirit’s brand intellectual property, the equity interests of Spirit Finance Cayman 1 Ltd. and Spirit Finance Cayman 2 Ltd. (the “HoldCos”) and the accounts of the issuers.
The notes were sold via Spirit IP Cayman Ltd. and Spirit Loyalty Cayman Ltd.
Proceeds will be used for general corporate purposes and to fund a reserve account.
Spirit Airlines is a Miramar, Fla.-based airline.
| Issuers: | Spirit IP Cayman Ltd. and Spirit Loyalty Cayman Ltd.
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| Amount: | $850 million, increased from $600 million
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| Maturity: | Sept. 20, 2025
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| Securities: | First-lien senior secured notes
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| Lead bookrunner: | Barclays (sole structuring agent)
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| Joint lead bookrunners: | Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and Morgan Stanley & Co. LLC
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| Coupon: | 8% (steps up to 10% if LTV ratio exceeds 62.5%)
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| Price: | 98.976
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| Yield: | 8¼%
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| Spread: | 797 bps
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| Call protection: | Three years
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| Trade date: | Sept. 2
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| Settlement date: | Sept. 17
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| Ratings: | Moody's: Ba3
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| Fitch: BB+
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| Distribution: | Rule 144A and Regulation S for life
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| Price talk: | 8¼% to 8½% all-in yield, including OID
|
| Marketing: | Roadshow
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