ITEM 7.01. REGULATION FD DISCLOSURE.
Secured Note Financing
On July 22, 2020, American Airlines, Inc. (the "Company") entered into a Note
Purchase Commitment Letter (the "Commitment Letter") with West Street Strategic
Solutions Fund I, L.P. and Broad Street Credit Holdings LLC, each of which is an
affiliate of the Merchant Banking Division of The Goldman Sachs Group, Inc. (the
"GS Purchasers") pursuant to which the GS Purchasers have committed to purchase
an aggregate of $1,000 million in initial principal amount of senior secured
notes (the "IP Notes") plus an additional $200 million in initial principal
amount of senior secured notes (the "LGA/DCA Notes" and together with the IP
Notes, the "Notes"). When issued, the Notes will be guaranteed by American
Airlines Group Inc., will mature approximately five and one-half years after
issuance, and will bear interest at a rate of 10.75 percent per annum, subject
to certain rights of the Company during the first two years the Notes are
outstanding, at its election, to pay interest at a rate of 12.0 percent per
annum payable one-half in cash and one-half in kind through the issuance of
additional Notes. The Notes will be redeemable prior to maturity subject to
payment of specified premiums, consisting of (a) for the first four years from
issuance, a customary treasury-based make-whole, (b) after the fourth but on or
prior to the fifth anniversary of the closing, 50% of the annual interest rate
described above multiplied by the principal amount of Notes being redeemed, and
(c) after the fifth anniversary of the closing, zero.
The IP Notes will be secured by a first lien security interest on certain
intellectual property of the Company, including the "American Airlines"
trademark and the "aa.com" domain name in the United States and certain foreign
jurisdictions, and a second lien on certain slots related to the Company's
operations at New York LaGuardia and Washington Regan National airports (the
"LGA/DCA slots") and certain other assets. Subject to certain conditions, the
Company will be permitted to incur up to $4,000 million of additional pari passu
debt and unlimited second lien debt with respect to the intellectual property
collateral securing the IP Notes. The LGA/DCA Notes will be secured by a first
lien security interest on the LGA/DCA slots and certain other assets, which
security interest will be pari passu with existing debt on such assets.
Upon closing, the net proceeds from the issuance of the Notes will be used for
general corporate purposes. The issuance of the Notes is presently expected to
close in the third quarter of 2020, subject to the satisfaction of closing
conditions, including the completion of definitive documentation.
Update Regarding Unencumbered Assets Available for Financing
Excluding (a) the assets intended to secure the secured note financing described
above, and (b) the AAdvantage program, which is intended to secure the loan that
the Company has applied for under the CARES Act, the Company retains assets that
could be used as collateral for additional secured debt as detailed in the
updated data provided below. Except as otherwise specified in the notes, the
values expressed below are based on the most recent third party appraisals
received by the Company.
Unencumbered Assets Value ($mil) Notes
Aircraft, ground service equipment, flight
Aircraft, Parts, and simulators, spare engines, regional spare
Equipment 2,050 parts
Corporate Real Estate 1,130
Other Corporate investments and assets,
Other 590 based on Company estimates
Total Unencumbered 3,770
First Lien Available Capacity under Current Credit Facilities
Available Capacity ($mil)
2014 Atlantic SGR 1,180
2013 South America SGR 448
Apr 2016 Mainline Spare
Parts 425
2020 Secured Note 1,250
IP Notes 4,000
Total 7,303
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EETC C Tranche
Availability
Capacity for incremental debt is available on 2019-1, 2016-1, 2016-2, 2016-3,
2014-1, and 2015-2 existing EETCs.
The information in this Item 7.01 is being furnished and shall not be deemed to
be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or otherwise subject to the liabilities of that
Section and shall not be deemed incorporated by reference into any registration
statement or other document filed pursuant to the Securities Act of 1933, as
amended (the "Securities Act"), except as shall be expressly set forth by
specific reference in such filing.
Cautionary Statement Regarding Forward-Looking Statements
Certain of the statements contained in this report should be considered
forward-looking statements within the meaning of the Securities Act, the
Exchange Act, and the Private Securities Litigation Reform Act of 1995. These
forward-looking statements may be identified by words such as "may," "will,"
"expect," "intend," "anticipate," "believe," "estimate," "plan," "project,"
"could," "should," "would," "continue," "seek," "target," "guidance," "outlook,"
"if current trends continue," "optimistic," "forecast" and other similar words.
Such statements include, but are not limited to, statements about the Company's
plans, objectives, expectations, intentions, estimates and strategies for the
future, and other statements that are not historical facts. These
forward-looking statements are based on the Company's current objectives,
beliefs and expectations, and they are subject to significant risks and
uncertainties that may cause actual results and financial position and timing of
certain events to differ materially from the information in the forward-looking
statements. These risks and uncertainties include, but are not limited to, those
set forth in the Company's Quarterly Report on Form 10-Q for the six months
ended June 30, 2020 (especially in Part I, Item 2. Management's Discussion and
Analysis of Financial Condition and Results of Operations and Part II, Item 1A.
Risk Factors), and other risks and uncertainties listed from time to time in the
Company's other filings with the Securities and Exchange Commission. There may
be other factors of which the Company is not currently aware that may affect
matters discussed in the forward-looking statements and may also cause actual
results to differ materially from those discussed. In particular, the
consequences of the coronavirus outbreak to economic conditions and the travel
industry in general and the financial position and operating results of the
Company in particular have been material, are changing rapidly, and cannot be
predicted. The Company does not assume any obligation to publicly update or
supplement any forward-looking statement to reflect actual results, changes in
assumptions or changes in other factors affecting these forward-looking
statements other than as required by law. Any forward-looking statements speak
only as of the date hereof or as of the dates indicated in the statement.
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