The agreement provides for a $1 billion term loan facility and a revolving credit facility that may be established in the future.
American borrowed $1 billion under the term loan facility, the proceeds of which were used to repay approximately $588 million in remaining principal plus accrued and unpaid interest of the tranche B2 term loans under a loan agreement originally dated May 23, 2013. Term loans under the credit agreement mature on April 28, 2023.
American may make voluntary prepayments at any time, with a premium of 1% applicable to certain prepayments made prior to the date that is six months following the closing date.
Mandatory prepayments are required to the extent necessary to comply with American’s covenants regarding the collateral coverage ratio and certain dispositions of the collateral.
The obligations of American under the credit agreement are secured by a lien on aircraft spare parts owned by American. American has the ability to add certain types of assets to the collateral and, subject to certain conditions, release collateral, in each case from time to time at its discretion.
The credit agreement requires American to periodically appraise the value of the collateral and calculate the collateral coverage ratio.