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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):
February 4, 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 |
(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.
Indenture Governing 5.750% Senior Secured Notes due
2026
On February 4, 2021, Hawaiian Airlines, Inc. (“Hawaiian”), a direct
wholly owned subsidiary of Hawaiian Holdings, Inc. (“Holdings” or
the “Company”), completed the private offering (the “Offering”) by
Hawaiian Brand Intellectual Property, Ltd., an indirect wholly
owned subsidiary of Hawaiian (the “Brand Issuer”), and
HawaiianMiles Loyalty, Ltd., an indirect wholly owned subsidiary of
Hawaiian (the “Loyalty Issuer” and, together with the Brand Issuer,
the “Issuers”) of an aggregate of $1,200,000,000 principal amount
of their 5.750% senior secured notes due 2026 (the
“Notes”).
The Notes are fully and unconditionally guaranteed, jointly and
severally, by (i) Hawaiian Finance 1 Ltd., a direct wholly owned
subsidiary of Hawaiian (“HoldCo 1”), (ii) Hawaiian Finance 2 Ltd.,
a direct subsidiary of HoldCo 1 and indirect wholly owned
subsidiary of Hawaiian (“HoldCo 2” and, together with HoldCo 1, the
“Cayman Guarantors”), (iii) Hawaiian and (iv) Holdings (Holdings,
together with Hawaiian, the “Parent Guarantors” and the Parent
Guarantors, together with the Cayman Guarantors, the “Guarantors”).
All guarantees are secured except for the Holdings guarantee, which
is not secured. The Notes are secured on a senior basis by
first-priority security interests in substantially all of the
assets of the Issuers. The Notes were issued pursuant to an
Indenture, dated as of February 4, 2021 (the “Indenture”), among
the Issuers, the Guarantors and Wilmington Trust, National
Association, as trustee, collateral agent and collateral custodian.
The Issuers lent the net proceeds from the offering of the Notes to
Hawaiian, after depositing a portion of such proceeds in a reserve
account to cover future interest payments on the Notes. The Notes
will mature on January 20, 2026. The Notes bear interest at a rate
of 5.750% per year, payable quarterly in arrears on July 20,
October 20, January 20 and April 20 of each year, beginning on July
20, 2021.
In connection with the issuance of the Notes, Hawaiian contributed
to the Brand Issuer, which is a newly-formed subsidiary structured
to be bankruptcy remote, all worldwide rights, owned or purported
to be owned, or later developed or acquired and owned or purported
to be owned, by Hawaiian or any of its subsidiaries, in and to all
intellectual property, including all trademarks, service marks,
brand names, designs, and logos that include the word “Hawaiian” or
any successor brand and the “hawaiianairlines.com” domain name and
similar domain names or any successor domain names (the “Brand
IP”). The Brand Issuer will indirectly grant to Hawaiian an
exclusive, worldwide, perpetual and royalty-bearing sublicense to
use the Brand IP (the “Brand IP Sublicense”). The Brand IP
Sublicense will be terminated, and Hawaiian’s right to use such
Brand IP will cease, upon specified termination events, including,
but not limited to, Hawaiian’s failure to assume the Brand IP
Sublicense in a restructuring process. The termination of the Brand
IP Sublicense would be an event of default under the Indenture and
in certain circumstances would trigger a substantial liquidated
damages payment calculated based on the present value of all future
payments under the Brand IP Sublicense.
Further, Hawaiian contributed to the Loyalty Issuer its rights to
certain other collateral owned by Hawaiian, including, to the
extent permitted by such agreements or otherwise by operation of
law, any of Hawaiian’s rights under the HawaiianMiles Agreements
and the IP Agreements (each as defined in the Indenture), together
with HawaiianMiles program (“HawaiianMiles”) customer data and
certain other intellectual property owned or purported to be owned,
or later developed or acquired and owned or purported to be owned,
by Hawaiian or any of its subsidiaries (including the Issuers) and
required or necessary to operate HawaiianMiles (the “Loyalty
Program IP”) (all such collateral being, the “Loyalty Program
Collateral”). The Loyalty Issuer will indirectly grant Hawaiian an
exclusive, worldwide, perpetual and royalty-free sub-license to use
the Loyalty Program IP (the “Loyalty Program IP Sublicense”). The
Loyalty Program IP Sublicense will be terminated, and Hawaiian’s
right to use such Loyalty Program IP will cease, upon specified
termination events, including, but not limited to, Hawaiian’s
failure to assume the Loyalty Program IP Sublicense in a
restructuring process. The termination of the Loyalty Program IP
Sublicense would be an event of default under the
Indenture.
Terms of the Notes
The terms of the Notes are described below.
The Notes are secured on a senior basis by first-priority security
interests in substantially all of the assets of the Issuers, other
than Excluded Property (as defined in the Indenture) and subject to
certain permitted liens (collectively, the “Issuer Collateral”).
The note guarantees of Hawaiian are secured by (i) a first-priority
security interest in 100% of the equity (other than the special
share issued to the Special Shareholder (as defined in the
Indenture)) of HoldCo 1 and (ii) the Brand IP and the Loyalty
Program Collateral (collectively, the “Hawaiian Collateral”). The
note guarantees of the Cayman Guarantors are secured by
first-priority security interests in
substantially all of the assets of the Cayman Guarantors, including
pledges of the equity of their respective subsidiaries (other than
the special share issued to the Special Shareholder (as defined in
the Indenture)) (collectively, the “Subsidiary Collateral” and,
together with the Issuer Collateral and the Hawaiian Collateral,
the “Collateral”). The note guarantee of Holdings is
unsecured.
The Notes and the note guarantees of the Guarantors (i) rank
equally in right of payment with all of the Issuers’ and the
Guarantors’ existing and future senior indebtedness, (ii) other
than with respect to the Holdings note guarantee, which is
unsecured, are effectively senior to all existing and future
indebtedness of the Issuers and the Guarantors that is not secured
by a lien, or is secured by a junior-priority lien, on the
Collateral, to the extent of the value of the Collateral securing
the Notes, (iii) are effectively subordinated to any existing or
future indebtedness of the Issuers and the Guarantors that is
secured by liens on assets that do not constitute a part of the
Collateral, to the extent of the value of such assets and (iv) rank
senior in right of payment to the Issuers’ and the Guarantors’
future subordinated indebtedness. The Issuers and Cayman Guarantors
are currently Hawaiian’s only material subsidiaries and Hawaiian is
Holdings’ only material subsidiary. To the extent Hawaiian creates
or acquires any other subsidiaries in the future, the Notes and
note guarantees will also be structurally subordinated to all
existing and future obligations, including trade payables, of any
such newly formed or after-acquired subsidiaries that do not
guarantee the Notes.
The Notes are redeemable at the option of the Issuers, in whole or
in part, at any time and from time to time, after January 20, 2024
at the redemption prices set forth in the Indenture. In addition,
the Notes are redeemable, at the option of the Issuers, at any time
and from time to time, in whole or in part, prior to January 20,
2024 at a price equal to 100% of their principal amount plus the
“make-whole” premium described in the Indenture and accrued and
unpaid interest, if any, thereon to, but excluding, the redemption
date. Additionally, from time to time on or prior to January 20,
2024, the Issuers may also redeem up to 40% of the original
outstanding principal amount of the Notes with proceeds from any
one or more equity offerings of Hawaiian at a redemption price
equal to 105.75% of the principal amount of Notes to be redeemed,
plus accrued and unpaid interest, if any, thereon to, but
excluding, the redemption date. Upon the occurrence of certain
mandatory prepayment events and mandatory repurchase offer events,
the Issuers will be required to make a prepayment on the Notes, or
offer to repurchase the Notes, pro rata to the extent of any net
cash proceeds received in connection with such events, at a price
equal to 100% of the principal amount to be prepaid, plus, in some
cases, an applicable premium. In addition, upon a change of control
of Hawaiian, the Issuers may be required to make an offer to prepay
the Notes at a price equal to 101% of the respective principal
amounts thereof, plus accrued and unpaid interest, if any, to, but
not including, the purchase date.
The Indenture contains certain covenants that limit the ability of
the Issuers, the Cayman Guarantors and, in certain circumstances,
Hawaiian to, among other things: (i) make Restricted Payments (as
defined in the Indenture), (ii) incur additional indebtedness,
(iii) create certain liens on the Collateral, (iv) sell or
otherwise dispose of the Collateral and (v) consolidate, merge,
sell or otherwise dispose of all or substantially all of the
Issuers’ assets.
The Indenture also requires the Issuers and, in certain
circumstances, Hawaiian, to comply with certain affirmative
covenants, including depositing the Transaction Revenues (as
defined in the Indenture) in collection accounts, with amounts to
be distributed for the payment of fees, principal and interest on
the Notes pursuant to a payment waterfall described in the
Indenture, and certain financial reporting requirements. In
addition, the Indenture requires Hawaiian to maintain minimum
liquidity at the end of any business day of at least $300
million.
HawaiianMiles is expected to continue to operate as it has in the
past.
Subject to certain materiality thresholds, qualifications,
exceptions, “baskets” and grace and cure periods, the Indenture
also includes certain customary events of default, including
payment defaults, covenant defaults, cross-defaults to certain
indebtedness, bankruptcy events, and a change of control of an
Issuer. Upon the occurrence of an event of default, at the
discretion of the Permitted Noteholders (as defined in the
Indenture), the outstanding obligations under the Indenture may be
accelerated and become due and payable immediately.
The foregoing summary of the Indenture is not complete and is
qualified in its entirety by reference to the full and complete
text of the Indenture, a copy of which is attached hereto as
Exhibit 4.1.
Item 1.02 Termination of a Material Definitive
Agreement.
On February 4, 2021, immediately prior to the closing of the
Offering, Hawaiian repaid in full the $45.0 million loan from the
U.S. Department of Treasury (the “Treasury”) under the Economic
Relief Program pursuant to the Coronavirus Aid, Relief, and
Economic Security Act (the “CARES Act”), and in connection with
such repayment,
terminated the Loan and Guarantee Agreement, dated as of September
25, 2020 (as amended and restated by the Restatement Agreement
dated as of October 23, 2020, and as further amended by the
Amendment to Loan and Guarantee Agreement, dated as of January 15,
2021), among Hawaiian, as the borrower, the Company, the guarantors
party thereto from time to time, the Treasury, and the Bank of New
York Mellon, as administrative agent and collateral agent. As
disclosed previously, the Company has ongoing obligations to the
Treasury under the CARES Act and the Consolidation Appropriations
Act, 2021 (the “CAA”).
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 hereby
incorporated by reference into this Item 2.03.
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 that reflect the Company’s current plans and
expectations. Such forward-looking statements include, without
limitation, the future operation of HawaiianMiles and the Company’s
ongoing obligations under the CARES Act and the CAA. Words such as
“expects,” “anticipates,” “projects,” “hopes,” “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;
employee up-take of voluntary early-out offers; 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.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
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Exhibit Number
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Title
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4.1* |
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Indenture, dated as of
February 4, 2021, by and among Hawaiian Brand Intellectual
Property, Ltd., HawaiianMiles Loyalty, Ltd., the guarantors named
therein and Wilmington Trust, National Association, as trustee,
collateral agent and collateral custodian, governing the
5.750% Senior Secured Notes due
2026.
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4.2 |
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104 |
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Cover Page Interactive Data File (embedded with the Inline XBRL
document) |
* Exhibits and schedules have been omitted pursuant to Item
601(a)(5) of Regulation S-K and will be furnished on a supplemental
basis to the Securities and Exchange Commission upon
request.
SIGNATURE
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: February 8, 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 |