Item 1.01 Entry into a Material Definitive Agreement.
Treasury Loan Agreement
On
On the Closing Date, Hawaiian borrowed
Borrowings under the Facility will initially bear interest at a variable rate
per annum equal to (a) the Adjusted LIBO Rate (as defined in the Loan Agreement)
plus (b) 2.50%. Accrued interest on the loans is payable in arrears on the first
business day following the 14th day of each March, June, September and December
(beginning with
All advances under the Facility will be in the form of term loans, all of which
will mature and be due and payable in a single installment on
In addition, if a "change of control" (as defined in the Loan Agreement) occurs with respect to Holdings, Hawaiian will be required to repay 100% of the loans outstanding under the Facility.
On the Closing Date, the obligations of Hawaiian under the Loan Agreement are secured by a first priority security interest on (1) substantially all of the assets related to Hawaiian's HawaiianMiles frequent flyer program (the "Loyalty Program"), including but not limited to our loyalty program partner participation agreements (including rights to receive cash flows thereunder), documents, deposit accounts, securities accounts, books and records and intellectual property primarily used in connection with the Loyalty Program and (2) fourteen (14) Boeing 717-200 airframes and the related twenty-eight (28) Rolls Royce BR715-A1-30 engines, together with their related accessories, aircraft documents and parts (collectively, the "Collateral"). Hawaiian is permitted under the Loan Agreement to add certain types of assets as additional collateral and subject to certain conditions, release Collateral, in each case from time to time at its discretion.
The Loan Agreement requires Hawaiian, under certain circumstances, including
within ten (10) business days prior to the last business day of March and
September of each year, beginning
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its obligations under the Loan Agreement or repay the loans in such amounts that the recalculated collateral coverage ratio, after giving effect to any such additional Collateral or repayment, is at least 1.6 to 1.0.
The Loan Agreement also requires Hawaiian to calculate the debt service coverage ratio on a quarterly basis. If the calculated debt service coverage ratio is less than 1.75 to 1.00, then Holdings and its subsidiaries will be required to place an amount equal to at least 50% of revenues received thereafter from the Loyalty Program (the "Loyalty Program Revenues") into a blocked account to be held for the benefit of the lenders who may choose to use such funds to prepay the outstanding term loans until the debt service coverage ratio is recalculated to be greater than or equal to 1.75 to 1.00. If the calculated debt service coverage ratio is less than or equal to 1.50 to 1.00, but greater than 1.25 to 1.00, then all amounts previously deposited into the blocked account will be used to prepay outstanding term loans and an amount equal to at least 50% of all future Loyalty Program Revenues will be transferred into the payment account and used to prepay outstanding term loans until the debt service coverage ratio is recalculated to be greater than 1.50 to 1.00. If the calculated debt service coverage ratio is less than or equal to 1.25 to 1.00, then all amounts previously deposited into the blocked account will be used to prepay outstanding term loans and an amount equal to at least 75% of all future Loyalty Program Revenues will be transferred into the payment account and used to prepay outstanding term loans until the debt service coverage ratio is recalculated to be greater than 1.25 to 1.00.
The Loan Agreement also includes affirmative, negative and financial covenants that, among other things, limit the ability of Holdings and its subsidiaries to pay dividends, repurchase common stock or make certain other payments, make certain investments, incur liens on the Collateral, dispose of the Collateral, enter into certain affiliate transactions and engage in certain business activities, in each case subject to certain exceptions. In addition, under the . . .
Item 2.03 Creation of Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement or a Registrant.
The information set forth in Item 1.01 under the caption "Treasury Loan Agreement" is hereby incorporated by reference into this Item 2.03.
Item 8.01 Other Events.
On
As previously disclosed on
Forward-Looking Statements
This Current Report on Form 8-K contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect the Company's current plans and expectations. Such forward-looking statements include, without limitation, the use of proceeds under the Loan Agreement, expectations and plans with respect to the Loan Agreement and the terms and conditions of the agreements entered into in connection therewith, and other statements herein that are not historical facts. Words such as "expects," "anticipates," "projects," "intends," "plans," "believes," "estimates," "will," variations of such words, and similar expressions are also intended to identify such forward-looking statements.
These forward-looking statements are and will be, as the case may be, subject to
many risks, uncertainties and assumptions relating to the Company's operations
and business environment, all of which may cause outcomes to be materially
different from any expected outcomes, expressed or implied, in these
forward-looking statements. These risks and uncertainties include, without
limitation: the effectiveness of the Company's cost cutting plans; the
continuing and developing effects of the COVID-19 pandemic, including its impact
on the demand for air travel; the expected duration of the
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The risks, uncertainties and assumptions described above also include the risks,
uncertainties and assumptions discussed from time to time in the Company's other
public filings and public announcements, including the Company's Annual Report
on Form 10-K and the Company's Quarterly Reports on Form 10-Q, as well as other
documents that may be filed by the Company from time to time with the
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