| ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT. |
On December 4, 2023, American Airlines, Inc., a Delaware corporation (the “Company”), completed its previously announced offering of $1.0 billion aggregate principal amount of 8.50% Senior Secured Notes due 2029 (the “Notes”). The obligations of the Company under the Notes are fully and unconditionally guaranteed (the “Guarantee”) on a senior unsecured basis by its parent, American Airlines Group Inc. (“AAG” or the “Guarantor”). The Notes were not registered under the Securities Act of 1933, as amended (the “Securities Act”), or any other securities laws of any jurisdiction and the Notes do not have the benefit of any exchange offer or other registration rights. The Notes were offered and sold only to persons reasonably believed to be qualified institutional buyers, as defined in, and in reliance on, Rule 144A under the Securities Act and to
non-U.S.
persons in offshore transactions outside the United States in reliance on Regulation S under the Securities Act.
The Company used the net proceeds from the offering of the Notes, together with the net proceeds from borrowings under the 2023 Term Loan Facility (as defined below) and cash on hand, to redeem all of its outstanding 11.75% Senior Secured Notes due 2025 (the “11.75% Senior Secured Notes”).
The Notes were issued pursuant to an indenture (the “Indenture”), dated as of December 4, 2023 (the “Issue Date”), by and among the Company, the Guarantor and Wilmington Trust, National Association, as trustee (in such capacity, the “Trustee”). The Company’s obligations with respect to the Notes are secured on a first lien basis by security interests in certain slots, gates and routes that the Company uses to provide nonstop scheduled air carrier services between certain airports in the United States and certain airports in Australia, Canada, the Caribbean, Central America, China, Hong Kong, Japan, Mexico, South Korea, and Switzerland (the “Collateral”). The Collateral also secures, on a first lien,
basis with the Notes, the 2023 Term Loan Facility.
Interest on the Notes is payable semiannually in arrears on May 15 and November 15 of each year, beginning on May 15, 2024. The Notes will mature on May 15, 2029.
The Company may redeem the Notes, in whole at any time or in part from time to time prior to November 15, 2025, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus a “make-whole” premium, plus any accrued and unpaid interest thereon to, but excluding, the date of redemption. At any time on or after November 15, 2025, the Company may redeem all or any of the Notes in whole at any time, or in part from time to time, at the redemption prices described under the Indenture, plus any accrued and unpaid interest thereon to, but excluding, the date of redemption. In addition, at any time prior to November 15, 2025, the Company may redeem up to 40% of the original aggregate principal amount of the Notes (calculated after giving effect to any issuance of additional notes) with the net cash proceeds of certain equity offerings, at a redemption price equal to 108.50% of the aggregate principal amount of the Notes to be redeemed, plus any accrued and unpaid interest thereon to, but excluding, the date of redemption. In addition, during each twelve-month period beginning the Issue Date and ending on or prior to November 15, 2025, the Company may redeem up to 10% of the original aggregate principal amount of the Notes (calculated after giving effect to any issuance of additional notes) at a redemption price of 103% of the principal amount thereof, plus any accrued and unpaid interest thereon to, but excluding, the applicable date of redemption.
Further, if certain change of control transactions occur, each holder of Notes may require the Company to repurchase the Notes in whole or in part at a repurchase price of 101% of the aggregate principal amount thereof, plus any accrued and unpaid interest thereon to but excluding, the repurchase date.
The Company is required to deliver an appraisal of the Collateral and officer’s certificate twice a year demonstrating the calculation of a collateral coverage ratio in relation to the Collateral (the “Collateral Coverage Ratio”) as of the date of delivery of the appraisal for the applicable period. If the Collateral Coverage Ratio is less than 1.6 to 1.0 as of the date of delivery of the appraisal for the applicable period, then, subject to a cure period in which additional collateral can be provided or debt repaid such that the Company meets the required Collateral Coverage Ratio, the Company will be required to pay special interest in an additional amount equal to 2.0% per annum of the principal amount of the Notes until the Collateral Coverage Ratio is established to be at least 1.6 to 1.0.
Copies of the Indenture and the form of the Notes are filed herewith as Exhibits 4.1 and 4.2, respectively, and are incorporated by reference herein. The foregoing descriptions of the Indenture and the Notes are qualified in their entirety by reference to such exhibits.
On December 4, 2023, the Company and AAG entered into a Credit and Guaranty Agreement (the “2023 Credit Agreement”) among the Company, as the borrower, AAG, as guarantor, the lenders from time to time party thereto, Citibank, N.A., as administrative agent and certain other parties from time to time party thereto. The 2023 Credit Agreement provides for a term loan facility (the “2023 Term Loan Facility”) in an aggregate principal amount of $1.1 billion that matures on June 4, 2029 and amortizes at 1.00% per annum.
On December 4, 2023, the Company borrowed $1.1 billion under the 2023 Term Loan Facility. The Company used the net proceeds from borrowings under the 2023 Term Loan Facility, together with the net proceeds from the offering of the Notes and cash on hand, to redeem all of its outstanding 11.75% Senior Secured Notes.
Borrowings under the 2023 Credit Agreement are secured by the Collateral on a first lien
basis with the Notes. The Company has the ability to make future modifications to the collateral pledged, subject to certain restrictions.
