Spirit Airlines driving by with $500 million Spirit Loyalty 8% mirror notes; price talk 97.5-98.5

By Paul A. Harris

Portland, Ore., Nov. 9 – Spirit Airlines, Inc. plans to price $500 million of notes mirroring the Spirit Loyalty Cayman Ltd./Spirit IP Cayman Ltd. 8% senior secured first-lien notes due Sept. 20, 2025 (expected ratings Ba2//BB+) in a Wednesday drive-by, according to market sources.

The Rule 144A for life deal, which was set to officially kick off on a Wednesday morning conference call with investors, is talked at 97.5 to 98.5, rich to earlier guidance of 97.5.

The mirror notes are subject to a call at 104 on Sept. 20, 2023, the same as the notes in the original issue.

Joint bookrunner Barclays will bill and deliver. Morgan Stanley & Co. LLC and Citigroup Global Markets Inc. are also joint bookrunners.

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 Miramar, Fla.-based airline plans to use the proceeds to partially repay its enhanced equipment trust certificates and further enhance its liquidity position.

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