Alaska Air Group, Inc. has announced a proposed senior secured term loan facility and intends to issue additional pari passu senior secured debt, collectively known as the "mileage plan financing." The aggregate principal amount of the financing is expected to be $1.5 billion.
The borrower or issuer under the mileage plan financing is as Mileage Plan IP Ltd., an exempted company incorporated with limited liability under the laws of the Cayman Islands and an indirect, wholly owned subsidiary of the company.
The financing will be fully and unconditionally guaranteed on a senior secured basis, jointly and severally, by Alaska Airlines, Inc. and as Mileage Plan Holdings Ltd., and on an unsecured basis by the company. It will be secured on a first-priority basis by the guarantors' right, title, and interest in certain collateral associated with Alaska's customer loyalty program, Alaska Airlines Mileage Plan™.
The borrowings under the financing are intended to be used to fund, in part, the reserve account for the mileage plan financing and to fund, in part, a collection account. The proceeds deposited into the collection account will be used to make an intercompany loan to Alaska on the closing date of the financing.
Alaska intends to use the proceeds from the intercompany loan to redeem certain outstanding debt acquired or assumed in the merger of the company with Hawaiian Airlines and for general corporate purposes to support its liquidity position. The market has reacted to these announcements by moving the company's shares 0.3% to a price of $41.8. For more information, read the company's full 8-K submission here.
