Item 1.01 Entry into a Material Definitive Agreement.
On March 13, 2020, JetBlue Airways Corporation (“JetBlue”) entered into a Delayed Draw Term Loan Credit Agreement (the “Credit Agreement”), among JetBlue, as borrower, the subsidiaries of JetBlue party thereto from time to time, as guarantors, the lenders party thereto from time to time and Morgan Stanley Senior Funding Inc., as administrative agent (the “Agent”). The Credit Agreement provides for a term loan facility of up to $1,000,000,000 (the “Term Loan Facility”).
On March 16, 2020, JetBlue borrowed the full amount of the Term Loan Facility (the “Term Loan”), the proceeds of which will be used to pay certain transaction fees and expenses, and for general corporate purposes of the Company. Amortization payments equal to 0.25% of the outstanding principal of the Term Loan will be due on the last day of each quarter during the term. The remaining outstanding principal amount of the Term Loan must be repaid in a single installment on the maturity date on March 15, 2021. JetBlue may prepay all or a portion of the Term Loan from time to time, at par plus accrued and unpaid interest.
Borrowings under the Credit Agreement bear interest at a variable rate equal to the London interbank offering rate, known as LIBOR (but not less than 1% per annum), plus a margin of 1.75% per annum, or at JetBlue’s election, another rate based on certain market interest rates.
The obligations of JetBlue under the Credit Agreement are secured by liens on certain aircraft and spare engines of JetBlue (the “Collateral”). The Credit Agreement includes provisions that require the Company to maintain unrestricted cash and cash equivalents and unused commitments available under all revolving credit facilities (including the Term Loan Facility) aggregating not less than $550 million.
The Term Loan Facility contains events of default customary for similar financings. Upon the occurrence of an event of default, the outstanding obligations under the Term Loan Facility may be accelerated and become due and payable immediately. In addition, if certain change of control events occur with respect to JetBlue, each lender under the Term Loan Facility has the right to require the Company to repay any loan that it has made under the Term Loan Facility.
The foregoing description does not purport to be complete and is qualified in its entirety by reference to the Credit Agreement.