01—Abstract
Summary
Summary of the 8-K filed February 22, 2024. Cited figures are marked; the original filing is the authoritative source.
On February 15, 2024, United Airlines Holdings, Inc. (UAL) and United Airlines, Inc. entered into an Amended and Restated Revolving Credit and Guaranty Agreement, which amends and restates the Existing Credit Facility dated April 21, 2021.
The revolving loan commitments total up to $2.865 billiona, an increase of $1.115 billion in borrowing capacity. Of this, $2.7 billion of commitments are from Extending Lenders maturing February 15, 2029, and $165 million from 2024 Non-Extending Lenders maturing April 21, 2025. No drawings had been made under the revolver as of the report date.
On February 22, 2024, United also entered into Amendment No. 2 to its Term Loan Credit and Guaranty Agreement. United used $1.37 billionb of available cash to partially prepay the existing term loans, which had an outstanding principal of $3.87 billion, and borrowed a new $2.5 billion term loan to prepay the remaining balance. The new term loans bear interest at Term SOFR plus a margin of 2.75%, which is 1.00% lower than the prior margin, and mature on February 22, 2031, with 1.00% annual amortization payable quarterly beginning June 30, 2024.
Both facilities are secured on a senior basis by specified collateral, including route authorities, landing and take-off slots, and airport terminal space rights. The facilities carry a minimum Collateral Coverage Ratio of 1.60:1 and a minimum liquidity requirement of $2.0 billionc, and they cap additional Priority Lien Debt at the greater of $11.0 billion or a level tied to collateral coverage ratios. Investors should note the repricing and extension of liquidity capacity, along with the expanded secured debt framework.
02—Key points
Key Highlights
- Revolving credit facility amended and restated, increasing commitments by $1.115 billion to up to $2.865 billion
- Revolver extended to February 15, 2029 for $2.7 billion of commitments; $165 million of commitments mature April 21, 2025
- No revolving loans drawn as of the filing date
- Term loans refinanced: $1.37 billion of cash used for partial prepayment and a new $2.5 billion term loan used to repay the remaining $3.87 billion-principal balance
- New term loans priced at Term SOFR plus 2.75%, 1.00% lower than prior margin, maturing February 22, 2031
- Facilities secured by route authorities, landing and take-off slots, and airport terminal space rights, with covenants requiring a 1.60:1 minimum Collateral Coverage Ratio and $2.0 billion minimum liquidity
- Priority Lien Debt capped at the greater of $11.0 billion or a collateral-coverage-based amount
03—Questions
Frequently Asked Questions
How much liquidity capacity does the revolving credit facility now provide?
The revolving credit facility provides commitments of up to $2.865 billion, an increase of $1.115 billion over the Existing Credit Facility. No drawings had been made as of the filing date.
What happened to the term loan facility?
United used $1.37 billion of available cash to partially prepay the existing term loans, which had an outstanding principal of $3.87 billion, and borrowed a new $2.5 billion term loan to repay the remaining balance.
What are the interest rate terms and maturities?
Term loans bear interest at Term SOFR plus 2.75% (or 1.75% at other market rates), 1.00% lower than the prior margin, and mature February 22, 2031 with 1.00% annual amortization payable quarterly from June 30, 2024. Revolving loans bear Term SOFR plus a credit adjustment spread and a margin of 3.00% to 3.50% on a corporate ratings grid, with maturities of February 15, 2029 for most lenders and April 21, 2025 for non-extending lenders.
What collateral secures these facilities and what covenants apply?
The facilities are secured on a senior basis by United's international route authorities, substantially all of its landing and take-off slots, and its airport terminal space rights, subject to certain exclusions. Financial covenants require a minimum Collateral Coverage Ratio of 1.60:1 and minimum Liquidity of $2.0 billion.
What limits does the filing place on additional secured debt?
United may not incur additional Priority Lien Debt if aggregate Priority Lien Debt would exceed the greater of $11.0 billion or an amount tied to a 2.00 to 1.00 Collateral Coverage Ratio and a 1.0 to 1.0 Total Collateral Coverage Ratio. The facilities do not limit unsecured debt.
04—Continue