Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet
Arrangement of a Registrant
On June 16, 2016, the New York Transportation Development Corporation (NYTDC) issued approximately $844
million of special facility revenue refunding bonds (the 2016 Bonds) on behalf of American Airlines, Inc. (American), a wholly-owned subsidiary of American Airlines Group Inc. (AAG). The net proceeds from the 2016
Bonds generally were used to provide a portion of the funds to defease and redeem in full the outstanding (i) New York City Industrial Development Agency Special Facility Revenue Bonds, Series 2002B (American Airlines, Inc. John F. Kennedy
International Airport Project) (the Prior Series 2002B Bonds), and (ii) New York City Industrial Development Agency Special Facility Revenue Bonds, Series 2005 (American Airlines, Inc. John F. Kennedy International Airport Project)
(the Prior Series 2005 Bonds, and together with the Prior Series 2002B Bonds, the Prior Bonds). The net proceeds from the Prior Bonds partially financed the construction of a terminal used by American at John F. Kennedy
International Airport (the Terminal).
American is required to pay debt service on the 2016 Bonds through payments under a loan agreement with
NYTDC and American will consolidate the debt in its financial statements. The 2016 Bonds are guaranteed by both American and AAG. Americans and AAGs obligations under these guarantees are secured by a mortgage (the Leasehold
Mortgage) on Americans lease of the Terminal and related property (the Lease) from the Port Authority of New York and New Jersey (PANYNJ).
The 2016 Bonds were issued with different maturities and bear interest as follows:
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Series 2016 Serial
Bonds
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Maturity Dates
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Amount
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Interest Rate
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Yield
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August 1, 2017
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$
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34,330,000
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5.00
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%
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1.85
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%
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August 1, 2018
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$
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41,325,000
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5.00
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%
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2.10
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%
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August 1, 2019
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$
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43,390,000
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5.00
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%
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2.50
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%
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August 1, 2020
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$
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45,560,000
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5.00
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%
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2.75
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%
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August 1, 2021
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$
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47,835,000
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5.00
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%
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2.90
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%
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Series 2016 Term
Bonds
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Maturity Dates
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Amount
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Interest Rate
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Yield(1)
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August 1, 2026
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$
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277,550,000
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5.00
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%
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3.30
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%
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August 1, 2031
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$
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354,220,000
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5.00
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%
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3.50
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%
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(1)
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Yield calculated based on a call date of August 1, 2021. After August 1, 2021, the Series 2016 Term Bonds may, at Americans election, bear interest at different rates and for different interest periods.
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The 2016 Bonds, in aggregate, were priced at approximately 107% of par value. Accordingly, the gross proceeds from the issuance of the 2016
Bonds were approximately $907 million. Of this amount, approximately $895 million was placed in escrow to partially fund the defeasement and redemption of the Prior Bonds and approximately $12 million was used to pay the costs of the issuance of the
2016 Bonds, including the underwriting discount.
The 2016 Bonds maturing after August 1, 2021 are subject to optional redemption at par in whole or
in part on any date on or after August 1, 2021. In addition, the 2016 Bonds are subject to optional redemption at par if (i) American determines the continued operation of the Terminal is impractical, uneconomical or undesirable,
(ii) the Terminal is condemned or taken by eminent domain or (iii) the operation of the Terminal is enjoined. The 2016 Bonds maturing on August 1, 2026 and August 1, 2031 are subject to mandatory sinking fund redemption on
specified dates.
In addition, the 2016 Bonds are subject to mandatory redemption in whole at par if PANYNJ exercises its option to terminate the
Leasehold Mortgage and are subject to mandatory redemption in whole (or in certain circumstances in part) at par if a specified portion of the Terminal is released from the Lease or if interest on the 2016 Bonds is determined to be taxable.
On or after August 1, 2021, the 2016 Bonds maturing after August 1, 2021 may be subject to mandatory tender for purchase, in whole or in part, at
the option of American.
Amounts payable with respect to the bonds can be accelerated upon the occurrence of certain events of default, including failure
to pay principal and interest when due and the occurrence of certain bankruptcy events with respect to American or AAG.