Bloomberg News

US Airways Said to Reduce Rate on $1.6 Billion Loan to Refinance

May 16, 2013

US Airways Group Inc. (LCC:US), the carrier merging with AMR Corp.’s American Airlines, lowered the rate on $1.6 billion of term loans it’s seeking to refinance debt due next year, according to a person with knowledge of the transaction.

A $1 billion term loan will pay interest at 3.25 percentage points more than the London interbank offered rate, with a 1 percent minimum on the lending benchmark, said the person, who asked not to be identified because terms of the deal are private. That compares with an originally proposed margin of 3.5 percentage points to 3.75 percentage points with the same floor on Libor.

US Airways will now sell the six-year debt at 99.5 cents on the dollar, reducing the discount initially offered by one half cent, according to the person.

A $600 million loan due in 3.5 years will now pay interest at 2.5 percentage points more than Libor, with a 1 percent minimum on the benchmark, the person said. The company originally proposed paying an interest rate margin of 2.75 percentage points to 3 percentage points, with the same floor on Libor.

The debt will now be sold at par, the person said, compared with an initial proposal to sell the loan at a discount 99.5 cents on the dollar.

In April, AMR filed a plan to exit bankruptcy based on a proposed merger with US Airways that would create the world’s largest airline. The American Airlines parent filed for bankruptcy in Manhattan in November 2011 and announced the deal with US Airways in February.

Citigroup Inc., Barclays Plc, Morgan Stanley and Goldman Sachs Group Inc. are arranging the debt for the company. Investors must let the banks know by 5 p.m. today in New York whether they will participate in the deal, said the person.

To contact the reporter on this story: Christine Idzelis in New York at cidzelis@bloomberg.net

To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net


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