ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On September 25, 2020 (the “Closing Date”), American Airways, Inc. (“American”) and American Airways Group Inc., American’s mum or dad company (“AAG”), entered right into a loan and Assure Settlement, dated as of the Closing Date (the “loan Agreement”), amongst American, because the borrower, AAG, as guarantor, the opposite guarantors celebration thereto infrequently, america Division of the Treasury (the “Treasury”), as lender, and the Bank of New York Mellon, as administrative agent and collateral agent. The loan Settlement, as executed on the Closing Date, gives for a secured time period loan facility (the “Facility”) which allows American to borrow as much as $5,477 million as additional described beneath. American has been suggested by the Treasury that it intends to allocate extra loans beneath the Coronavirus Help, Reduction, and Financial Safety Act (the “CARES Act”) in October 2020 and that such extra allocations are at the moment anticipated to trigger the quantity obtainable to American beneath the Facility to extend to as much as $7,500 million within the combination, though such quantity is topic to ultimate approval by the Treasury. Any such improve would require a written modification to the loan Settlement executed by the entire events thereto.
On the Closing Date, American borrowed $550 million and may, at its choice, borrow extra quantities in as much as two subsequent borrowings till March 26, 2021. The proceeds from the Facility shall be used for sure common company functions and working bills in accordance with the phrases and circumstances of the loan Settlement and the relevant provisions of the CARES Act.
Borrowings beneath the Facility will bear curiosity at a variable fee every year equal to (a)(i) the London interbank provide fee divided by (ii) one (1) minus the Eurodollar Reserve Share (as outlined within the loan Settlement) plus (b) 3.50%. Accrued curiosity on the loans shall be payable in arrears on the primary enterprise day following the 14
day of every March, June, September and December (starting with September 15, 2021), and on the Maturity Date (as outlined beneath). The relevant rate of interest for the $550 million loan drawn on the Closing Date beneath the Facility shall be 3.87% every year for the interval from the Closing Date by September 15, 2021 at which era the rate of interest will reset in accordance with the foregoing system.
All advances beneath the Facility shall be within the type of time period loans, all of which is able to mature and be due and payable in a single installment on June 30, 2025 (the “Maturity Date”). Voluntary prepayments of loans beneath the Facility may be made, in entire or partly, by American, with out premium or penalty, at any time and infrequently. Quantities pay as you go may not be reborrowed. Necessary prepayments of loans beneath the Facility are required, with out premium or penalty, to the extent essential to adjust to American’s covenants relating to the expiry of sure agreements constituting Collateral (as outlined beneath), the debt service protection ratio, sure tendencies of the Collateral, sure debt issuances secured by liens on the Collateral and sure indemnity, termination, liquidated damages or insurance coverage funds associated to the Collateral. As well as, if a “change of control” (as outlined within the loan Settlement) happens with respect to AAG, American shall be required to repay the loans excellent beneath the Facility.
On the Closing Date, the obligations of American beneath the loan Settlement are secured by a primary precedence safety curiosity on American’s rights beneath U.S.
bank card agreements and sure different loyalty program accomplice participation agreements (together with rights to obtain cash flows thereunder), paperwork, deposit accounts, securities accounts, books and data and mental property associated to American’s AAdvantage
frequent flyer program (the “Loyalty Program”) and all proceeds, accessions, rents or earnings associated to the foregoing (collectively, the “Collateral”). American is permitted beneath the loan Settlement so as to add sure varieties of belongings to the Collateral and, topic to sure circumstances, launch Collateral, in every case infrequently at its discretion.
The loan Settlement requires American, beneath sure circumstances, together with inside ten (10) enterprise days previous to the final enterprise day of March and September of every yr, starting March 2021, to appraise the value of the Collateral and recalculate the collateral protection ratio. If the calculated collateral protection ratio is lower than 1.6 to 1.0, American shall be required both to supply extra Collateral (which may embrace cash collateral) to safe its obligations beneath the loan Settlement or repay the time period loans beneath the Facility, in such quantities that the recalculated collateral protection ratio, after giving impact to any such extra Collateral or compensation, is at the least