Hawaiian Airlines has initiated an offer to exchange their outstanding 5.750% Senior Secured Notes, which are due to mature in 2026, for new 11.000% Senior Secured Notes set to mature in 2029, along with cash payments. If the offer is fully subscribed by the early exchange deadline, the airline will exchange notes worth USD 1.2 billion for new notes valued at USD 990 million and a cash payout of USD 220 million.
Under the terms of the exchange, noteholders who tender their existing notes by the early exchange deadline of 17:00 EST (21:00 UTC) on July 9 will receive USD 825 of new notes and USD 175 in cash for every USD 1,000 principal amount of the existing notes. Noteholders who tender their existing notes after the early exchange deadline but before 17:00 EST (21:00 UTC) on July 24, 2024, will receive USD 825 of new notes and USD 125 in cash for every USD 1,000 principal amount of the existing notes.
In its analyst presentation accompanying the announcement, Hawaiian Airlines stated that the deal provides existing bondholders with a higher coupon rate and partial payment at par while maintaining a strong collateral package backed by the airline’s frequent flyer program and brand intellectual property.
Hawaiian Airlines emphasized that managing its debt maturity dates is crucial for liquidity management and implementing its business plan, which includes operational initiatives to enhance cash flow and profits. The airline’s debt maturity profile includes USD 33 million payable this year for enhanced equipment trust certificates (EETCs) and aircraft financing, USD 64 million due in 2025 for similar reasons, plus a maturing USD 235 million revolving credit facility. Additionally, USD 148 million is due in 2026 for EETCs and aircraft financing, along with the USD 1.2 billion in existing notes the airline hopes to defer through the current exchange offer. In 2027, USD 22 million is due for EETCs and aircraft financing. Hawaiian Airlines currently has USD 370 million in debt obligations maturing in 2028 and beyond, which will be affected by the deferment.
The final settlement date for any exchanged bonds is set for July 26, 2024, and the new bonds will mature on April 15, 2029.
