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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of
the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
January 15, 2021
HAWAIIAN HOLDINGS INC
(Exact name of registrant as specified in its charter)
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Delaware |
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001-31443 |
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71-0879698 |
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(State or other jurisdiction of incorporation) |
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(Commission File Number) |
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(IRS Employer
Identification No.) |
3375 Koapaka Street, Suite G-350
Honolulu, HI 96819
(Address of principal executive offices, including zip
code)
(808) 835-3700
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last
report.)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
☐
Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the
Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock
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HA
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NASDAQ Global Select Market
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Indicate by check mark whether the registrant is an emerging growth
company as defined in Rule 405 of the Securities Act of 1933
(§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange
Act of 1934 (§240.12b-2 of this
chapter).
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange
Act. ☐
Item 1.01
Entry into a Material Definitive Agreement
On January 15, 2021 (the “PSP Closing Date”), Hawaiian Airlines,
Inc. (“Hawaiian”), a Delaware corporation and wholly owned
subsidiary of Hawaiian Holdings, Inc. (the “Company”), entered into
a Payroll Support Program Extension Agreement (the “PSP Extension
Agreement”) with the U.S. Department of the Treasury (“Treasury”)
with respect to the Payroll Support Program Extension (the “PSP
Extension”) under Subtitle A of Title IV of Division N of the
Consolidated Appropriations Act, 2021 (the “PSP Extension Law”). In
connection with its entry into the PSP Extension Agreement, on the
PSP Closing Date, the Company entered into a Warrant Agreement (the
“Warrant Agreement”) with Treasury, and Hawaiian issued a
promissory note to Treasury (the “Note”), with the Company as
guarantor of Hawaiian’s obligations thereunder.
PSP Extension Agreement
Pursuant to the PSP Extension Agreement, Treasury is to provide
Hawaiian with financial assistance to be paid in installments
(each, an “Installment”) expected to total in the aggregate
approximately $167.5 million, to be used exclusively for the
purpose of continuing to pay employee salaries, wages and benefits,
including the payment of lost wages, salaries and benefits, to
certain Returning Employees (as defined below). The first
Installment, in the amount of approximately $83.75 million
(representing 50% of the current expected total payment), was
disbursed by Treasury on January 15, 2021. The remaining
Installments are anticipated to be paid as follows: (i) 50% of the
current expected total payment anticipated in the first quarter of
2021 and (ii) a possible final payment based on any adjustments by
Treasury to the initial expected total payment.
Under the PSP Extension Agreement, Hawaiian, on behalf of itself
and the Company, agreed to (i) refrain from conducting involuntary
furloughs or reducing employee rates of pay or benefits through
March 31, 2021, (ii) recall any employees who were subject to an
involuntary termination or furlough between October 1, 2020 and the
date of the PSP Extension Agreement pursuant to a recall notice and
compensate employees who elect to return to employment pursuant to
such recall notice (“Returning Employees”) for lost salary, wages
and benefits for the period between December 1, 2020 and the date
of the PSP Extension Agreement, (iii) limit executive compensation
through October 1, 2022 and (iv) suspend payment of dividends and
stock repurchases through March 31, 2022. The PSP Extension
Agreement also imposes certain Treasury-mandated reporting
obligations on Hawaiian and the Company. Finally, Hawaiian is
required to continue to provide air service to markets served prior
to March 1, 2020 until March 1, 2022, to the extent determined
reasonable and practicable by the U.S. Department of Transportation
(“DOT”).
Promissory Note
The Note issued by Hawaiian to Treasury has an initial principal
amount of $0.0, subject to an increase equal to 30% of the amount
of each additional Installment disbursed under the PSP Extension
Agreement after the PSP Closing Date, provided that no increase to
the Note principal amount shall occur until the aggregate principal
amount of any disbursements under the PSP Extension Agreement is
greater than $100 million, and includes a guarantee of Hawaiian’s
obligations by the Company. Assuming disbursement of all scheduled
Installments pursuant to the PSP Extension Agreement of
approximately $167.5 million, the Note will have a total principal
amount of approximately $20.3 million.
The Note has a ten-year term and bears interest at a rate per annum
equal to 1% until the fifth anniversary of the PSP Closing Date,
and thereafter bears interest at a rate equal to the secured
overnight financing rate plus 2% until the tenth anniversary of the
PSP Closing Date, which interest is payable semi-annually beginning
on March 31, 2021. The Note may be prepaid at any time, without
penalty. Within 30 days of the occurrence of certain change of
control triggering events, Hawaiian is required to prepay the
aggregate amount outstanding under the Note. The Note specifies
certain events of default, including non-payment of principal or
interest, inaccuracy of representations and warranties,
non-compliance with covenants, cross-acceleration and cross-payment
default of other indebtedness amounting to $10.0 million or
greater, bankruptcy or insolvency, entry of judgment liens (not
covered by insurance) exceeding $10.0 million, or non-monetary
judgments reasonably expected to have a material adverse effect on
Hawaiian.
Warrant Agreement and Warrants
As compensation to the U.S. government for the provision of
financial assistance under the PSP Extension Agreement, and
pursuant to the Warrant Agreement, the Company has agreed to issue
to Treasury warrants (each, a “Warrant”) to purchase shares of the
Company’s common stock (the “Warrant Shares”) at an exercise price
of $17.78 per share (“Exercise Price”), which was the closing price
of the Company’s common stock on December 24, 2020. Pursuant to the
Warrant Agreement, (a) on the PSP Closing Date, the Company did not
issue to Treasury a Warrant to purchase shares of the Company’s
common stock and (b) on the date of each increase of the principal
amount of the Note in connection with the disbursement of an
additional Installment under the PSP Extension Agreement, the
Company will issue to Treasury a Warrant for a number of shares of
the Company’s common stock equal to 10% of such increase of the
principal amount of the Note, divided by the Exercise Price.
Assuming the disbursement of all scheduled Installments pursuant to
the PSP Extension Agreement, the total number of Warrant Shares
issuable to Treasury is anticipated to be 113,940. The Warrants are
non-voting, freely transferable, may be settled as net shares or in
cash at the Company’s option, expire five years from the date of
issuance, and contain registration rights and customary
anti-dilution provisions.
Any issuance of the Warrants under the Warrant Agreement is
pursuant to an exemption from registration provided for under
Section 4(a)(2) of the Securities Act of 1933, as amended (the
“Securities Act”) as transactions not involving a public offering.
Any issuance of Warrant Shares upon exercise of the Warrants will
be exempt as an exchange by the Company exclusively with its
security holders eligible for exemption under Section 3(a)(9) of
the Securities Act.
Amendment to Loan and Guarantee Agreement
On January 15, 2021 (the “Amendment Date”), Hawaiian entered into
an Amendment to Loan and Guarantee Agreement, dated as of the
Amendment Date (the “Amendment”), which amended the Loan and
Guarantee Agreement dated as of September 25, 2020 (as amended and
restated on October 23, 2020, the “Previous Credit Agreement,” and,
the Previous Credit Agreement, as amended by the Amendment, the
“Amended Credit Agreement”), among Hawaiian, as the borrower, the
Company, the guarantors party thereto from time to time, Treasury,
and the Bank of New York Mellon, as administrative agent and
collateral agent. The Amended Credit Agreement, among certain other
things, (i) extends the initial lender’s loan commitment
termination date from March 26, 2021 to May 28, 2021, and (ii)
amends the definition of “Warrants” to include the Warrants issued
to Treasury pursuant to the PSP Extension Agreement.
The foregoing summary of these agreements is not complete and is
qualified in its entirety by such agreements, copies of which will
be filed with the Securities and Exchange Commission on a later
date.
Item 2.03
Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant
The information described under Item 1.01 above is incorporated
herein by reference.
Item 3.02
Unregistered Sales of Equity Securities
The information described under Item 1.01 above is incorporated
herein by reference.
Forward-Looking Statements
This Current Report on Form 8-K contains “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. Such forward-looking statements include,
without limitation, expectations and plans with respect to
participation in the PSP Extension and the terms and conditions of
the agreements entered into in connection therewith. Words such as
“expects,” “anticipates,” “projects,” “intends,” “plans,”
“believes,” “estimates,” “will,” variations of such words, and
similar expressions are also intended to identify such
forward-looking statements.
These forward-looking statements are and will be, as the case may
be, subject to many risks, uncertainties and assumptions relating
to the Company’s operations and business environment, all of which
may cause outcomes to be materially different from any expected
outcomes, expressed or implied, in these forward-looking
statements. These risks and uncertainties include, without
limitation: the effectiveness of the Company’s cost cutting plans;
the continuing and developing effects of the COVID-19 pandemic,
including its impact on the demand for air travel; the expected
duration of the State of Hawai‘i and local mandated quarantine
requirements, the pre-travel COVID-19 test alternative and the
potential imposition of further restrictions on travel in the
future; the Company’s dependence on tourist travel; the
availability of aircraft fuel, aircraft parts and personnel; the
Company’s ability to continue to generate sufficient cash; changes
in the Company’s future capital needs; and other macroeconomic,
political and regulatory developments.
The risks, uncertainties and assumptions described above also
include the risks, uncertainties and assumptions discussed from
time to time in the Company’s other public filings and public
announcements, including the Company’s Annual Report on Form 10-K
and the Company’s Quarterly Reports on Form 10-Q, as well as other
documents that may be filed by the Company from time to time with
the Securities and Exchange Commission. All forward-looking
statements included in this document are based on information
available to the Company on the date hereof. Except as required by
law, the Company does not undertake to publicly update or revise
any forward-looking statements to reflect events or circumstances
that may arise after the date hereof.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly
authorized.
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Dated: January 15, 2021 |
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HAWAIIAN HOLDINGS, INC. |
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By: |
/s/ Shannon L. Okinaka |
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Name: |
Shannon L. Okinaka |
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Title: |
Executive Vice President, Chief Financial Officer and
Treasurer |
