By Paul A. Harris
Portland, Ore., Nov. 9 – Spirit Airlines, Inc. priced an upsized $600 million issue of notes mirroring the Spirit Loyalty Cayman Ltd./Spirit IP Cayman Ltd. 8% senior secured first-lien notes due Sept. 20, 2025 (Ba2//BB+) at 98.5 to yield 8.599% in a Wednesday drive-by, according to market sources.
The issue size increased from $500 million.
The issue price came at the rich end of the 97.5 to 98.5 price talk. Earlier guidance was 97.5.
The notes were wrapped around 99 in active trading at Wednesday’s close, according to a sellside source, who added that demand was heard to be around $1.5 billion.
Joint bookrunner Barclays will bill and deliver. Morgan Stanley & Co. LLC, Citigroup Global Markets Inc. and Deutsche Bank Securities Inc. were 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. The remainder of the proceed, including the incremental proceeds resulting from the $100 million upsizing of the deal, will be used to enhance the company's liquidity position.
| Issuers: | Spirit Loyalty Cayman Ltd. and Spirit IP Cayman Ltd.
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| Amount: | $600 million, increased from $500 million
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| Issue: | Senior secured first-lien mirror notes
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| Maturity: | Sept. 20, 2025
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| Joint bookrunners: | Barclays (bill and deliver), Morgan Stanley & Co. LLC, Citigroup Global Markets Inc. and Deutsche Bank Securities Inc.
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| Coupon: | 8%
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| Price: | 98.5
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| Yield: | 8.599%
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| Spread: | 405 bps
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| First call: | Sept. 20, 2023 at 104
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| Trade date: | Nov. 9
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| Settlement date: | Nov. 17
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| Ratings: | Moody's: Ba2
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| Fitch: BB+
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| Distribution: | Rule 144A and Regulation S for life
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| Price talk: | 97.5 to 98.5
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| Marketing: | Drive-by
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