On Oct. 15, 2024, Mileage Plan IP, an exempted company incorporated in the Cayman Islands and a wholly owned subsidiary of Alaska Air Group, entered a $750 million senior secured term loan facility., according to an 8-K filing. Bank of America acted as the administrative agent, and U.S. Bank Trust Company served as collateral administrator. The facility, fully drawn at closing, is secured on a pari passu basis with the company’s existing notes using substantially the same collateral.
The loans will bear interest at a variable rate based on Term SOFR, with a floor of zero, plus a specified margin. The agreement includes restrictions on Loyalty Issuer and its parent, HoldCo, limiting additional debt incurrence to priority lien debt, junior debt under specific conditions, and permitted pre-paid miles purchases. The facility does not limit the amount of unsecured debt or debt secured by other assets that Alaska Air Group or its subsidiaries may incur.
Quarterly amortization payments are required starting after the first full fiscal quarter, and the agreement includes mandatory prepayment provisions related to asset dispositions or changes of control. Prepayments made outside of certain mandatory events may be subject to a prepayment premium. The agreement also includes financial covenants, such as a debt service coverage ratio test, and outlines events of default, including cross-defaults with other material indebtedness.
