Item 1.01
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Entry into a Material Definitive Agreement.
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Senior Secured Notes Offering
On April 21, 2021, United Airlines, Inc. (“United”)
completed its previously announced offering of $4.0 billion in aggregate principal amount of two series of notes, consisting of $2.0 billion
in aggregate principal amount of 4.375% senior secured notes due 2026 (the “2026 Notes”) and $2.0 billion in aggregate principal
amount of 4.625% senior secured notes due 2029 (the “2029 Notes” and, together with the 2026 Notes, the “Notes,”
and each a “series” of Notes) in a private placement conducted pursuant to Rule 144A and Regulation S under the Securities
Act of 1933, as amended (the “Securities Act”). The Notes are guaranteed (the “Guarantees”) on an unsecured basis
by United’s parent company, United Airlines Holdings, Inc. (“UAL” and, together with United, the “Company,”
“we,” “us” or “our”). On the same day, United entered into a new Term Loan Credit and Guaranty Agreement
and a new Revolving Credit and Guaranty Agreement. See “New Loan Facilities” below.
On April 21, 2021, United used net proceeds from
the offering of the Notes and borrowings under the Term Loan Facility (as defined below) (i) to repay in
full the $1.4 billion aggregate principal amount outstanding under the term loan facility (the “2017 Term Loan Facility”)
included in the Amended and Restated Credit and Guaranty Agreement, dated as of March 29, 2017, among United, UAL, JPMorgan Chase Bank,
N.A., as administrative agent, and the lenders from time to time party thereto, as amended (the “Existing Credit Agreement”),
the $1.0 billion aggregate principal amount outstanding under the revolving credit facility (the “2017 Revolving Credit Facility”)
included in the Existing Credit Agreement and the $520 million aggregate principal amount outstanding under the Loan and Guarantee Agreement,
dated as of September 28, 2020, among United, UAL, the U.S. Department of the Treasury and the Bank of New York Mellon, as administrative
agent, as amended (the “CARES Act Term Loan Facility” and, together with the 2017 Term Loan Facility and the 2017 Revolving
Credit Facility, the “Facilities”) and (ii) to pay certain fees and expenses relating to the offering of the Notes and the
New Loan Facilities (as defined below). United will use the balance of such proceeds for remaining fees and expenses and for United’s
general corporate purposes. As a result of such repayments, the Facilities were terminated on April 21, 2021, and no further borrowings
may be made thereunder.
The obligations of the Company under the Facilities
were secured by liens on certain international route authorities and related airport take-off and landing slots and gate leaseholds. Upon
prepayment of the Facilities, the liens on such collateral, including assets that serve as Collateral (as defined below)
for the Notes and the New Loan Facilities, were released.
Certain of the initial purchasers in the Notes offering or affiliates
of certain of the initial purchasers are lenders, and in some cases agents or managers for the lenders, under the New Loan Facilities.
In addition, certain of the initial purchasers or affiliates of certain of the initial purchasers were agents and/or lenders under the
Facilities, and received a portion of the net proceeds from the offering of the Notes and borrowings under the Term Loan Facility.
The Notes and the Guarantees are governed by an Indenture,
dated as of April 21, 2021 (the “Indenture”), among United, as issuer, UAL, as guarantor, and Wilmington Trust, National Association,
as trustee (the “Trustee”) and as collateral trustee (the “Collateral Trustee”). The Notes are secured on a senior
basis by security interests granted by United to the Collateral Trustee for the benefit of the holders of the Notes and the lenders under
the New Loan Facilities, among other parties, on the following (the “Collateral”): (i) all of United’s route authorities
granted by the U.S. Department of Transportation to operate scheduled service between any international airport located in the United
States and any international airport located in any country other than the United States (except Cuba), (ii) United’s rights to
substantially all of its landing and take-off slots at foreign and domestic airports, including at John F. Kennedy International
Airport, LaGuardia Airport and Ronald Reagan Washington National Airport (subject to certain exclusions), and (iii) United’s rights
to use or occupy space at airport terminals, each to the extent necessary at the relevant time for servicing scheduled air carrier service
authorized by an applicable route authority. United may be required to pledge additional collateral in the future under the terms of the
Notes. The Indenture does not limit the amount of unsecured debt that we or our subsidiaries may incur or the amount of debt secured by
assets other than the Collateral that we may incur.
The terms on which the Collateral Trustee will receive, hold, administer,
maintain, enforce and distribute the proceeds of all of its liens on the Collateral pursuant to the Indenture are set forth in a Collateral
Trust Agreement, dated as of April 21, 2021 (the “Collateral Trust Agreement”), by and among United, any other grantor from
time to time party thereto, JPMorgan Chase Bank, N.A., as administrative agent under the Term Loan Facility, JPMorgan Chase Bank, N.A.,
as administrative agent under the Revolving Credit Facility (as defined below), the Trustee, as trustee for each series, each other secured
debt representative from time to time party thereto and the Collateral Trustee.
The 2026 Notes bear interest at a rate of 4.375%
per annum and will mature on April 15, 2026. The 2029 Notes bear interest at a rate of 4.625% per annum and will mature on April 15, 2029.
Interest on the Notes is payable semi-annually in arrears on April 15 and October 15 of each year, commencing on October 15, 2021, to
holders of record of the Notes on the immediately preceding April 1 and October 1.
At any time prior to October 15, 2025, United may redeem some or all
of the 2026 Notes at a redemption price equal to the greater of (1) 100% of the principal amount of the 2026 Notes being redeemed and
(2) a make-whole amount, if any, plus, in either case, accrued and unpaid interest to such redemption date. On or after October 15, 2025
(six months prior to maturity), United may redeem the 2026 Notes at par plus accrued and unpaid interest. At any time prior to October
15, 2028, United may redeem some or all of the 2029 Notes at a redemption price equal to the greater of (1) 100% of the principal amount
of the 2029 Notes being redeemed and (2) a make-whole amount, if any, plus, in either case, accrued and unpaid interest to such redemption
date. On or after October 15, 2028 (six months prior to maturity), United may redeem the 2029 Notes at par plus accrued and unpaid interest.
Upon the occurrence of a Change of Control Triggering
Event (as defined in the Indenture) with respect to any series of Notes, unless a third party makes a Change of Control Offer (as defined
in the Indenture) or United has exercised its right to redeem the Notes of such series, each holder of Notes of such series will have
the right to require United to repurchase all or a portion of such holder’s Notes of such series at a price equal to 101% of the
principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the repurchase date.
If we sell Collateral under certain circumstances
specified in the Indenture and do not use the proceeds for certain specified purposes, United must offer to use certain net proceeds therefrom
to (1) repurchase the Notes at 100% of the principal amount of the Notes repurchased, plus accrued and unpaid interest, if any, to the
applicable date of repurchase, and (2) repay, prepay or redeem all Priority Lien Debt (as defined in the Indenture, the “Priority
Lien Debt”) containing similar payment provisions.
United is required to deliver an appraisal of the
Collateral, and an officers’ certificate demonstrating the calculation of the Priority Debt Coverage Ratio (as defined in the Indenture),
on a semi-annual basis. If United fails to deliver the officers’ certificate in a timely manner or the Priority Debt Coverage Ratio
is less than 1.6 to 1.0 as of the date the corresponding semi-annual appraisal was delivered, United will, subject to a 45 day cure period,
be required to pay special interest in an additional amount equal to 2.0% per year of the principal amount of the Notes until the Priority
Debt Coverage Ratio is demonstrated to be at least 1.6 to 1.0.
The Indenture also contains covenants that, among
other things, limit our ability under certain circumstances to create liens on the Collateral, make certain dividends, stock repurchases,
restricted investments and other restricted payments, and consolidate, merge, sell, or otherwise dispose of all or substantially all of
our assets.
The Indenture also contains events of default customary for indentures
of this type. If an event of default (other than an event of default relating to certain events of bankruptcy, insolvency or reorganization
of UAL, United or any significant subsidiary of UAL) with respect to any series of Notes has occurred and is continuing, the Trustee or
the holders of at least 25% in aggregate principal amount of the then outstanding Notes of such series may declare all the Notes of such
series to be due and payable. If an event of default with respect to any series of Notes relating to certain events of bankruptcy, insolvency
or reorganization of UAL, United or any significant subsidiary of UAL occurs, the Notes of such series will become immediately due and
payable.
New Loan Facilities
On April 21, 2021, the Company also entered into (i) a Term Loan Credit
and Guaranty Agreement (the “Term Loan Facility”), among United, as borrower, UAL, as parent and guarantor, the subsidiaries
of UAL other than United party thereto from time to time, as guarantors, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative
agent, and the Collateral Trustee initially providing term loans (the “Term Loans”) up to an aggregate amount of $5.0 billion
and (ii) a Revolving Credit and Guaranty Agreement (the “Revolving Credit Facility” and, together with the Term Loan Facility,
the “New Loan Facilities”), among United, as borrower, UAL, as parent and guarantor, the subsidiaries of UAL other than United
party thereto from time to time, as guarantors, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and the
Collateral Trustee, initially providing revolving loan commitments (any loans made thereunder, the “Revolving Loans”) of up
to $1.75 billion. United borrowed the full amount of the Term Loans on April 21, 2021.
The Term Loans will bear interest at a variable rate equal to
3.75% above the London Interbank Offered Rate (“LIBOR”) (subject to a 0.75% LIBOR floor), or, at United’s
election, 2.75% above another rate based on certain market interest rates (subject to a floor of 1.0%). The Revolving Loans, if any,
will bear interest at a variable rate equal to LIBOR (subject to a 0.00% LIBOR floor), or, at United’s election, another rate
based on certain market interest rates (subject to a floor of 1.0%), in each case plus a variable margin based on a corporate
ratings grid ranging from 3.00% to 3.50%, in the case of LIBOR loans, and 2.00% to 2.50%, in the case of loans at other market
rates.
The New Loan Facilities are secured by the Collateral on an equal and
ratable basis with the Notes and any other Priority Lien Debt. United may be required to pledge additional collateral in the future under
the terms of the New Loan Facilities. The terms on which the Collateral Trustee will receive, hold, administer, maintain, enforce and
distribute the proceeds of all of its liens on the Collateral pursuant to the New Loan Facilities are set forth in the Collateral Trust
Agreement. The New Loan Facilities do not limit the amount of unsecured debt that we or our subsidiaries may incur or the amount of debt
secured by assets other than the Collateral that we may incur.
The New Loan Facilities prohibit
United from incurring any additional Priority Lien Debt if, among other conditions, after the incurrence thereof the aggregate
principal amount of all Priority Lien Debt would exceed the greater of (x) $11.0 billion and (y) such an amount as would cause the
Collateral Coverage Ratio (as defined in each New Loan Facility) to be equal to 2.00 to 1.00 and
the Total Collateral Coverage Ratio (as defined in each New Loan Facility) to be equal to 1.0 to
1.0; provided that, subject to certain exceptions, no additional Priority Lien Debt may be incurred prior to the first anniversary
date of the closing of the New Loan Facilities. Additionally, the New Loan Facilities prohibit United from incurring any
indebtedness secured by junior liens on the Collateral if, among other conditions, after the incurrence thereof the Total Collateral
Coverage Ratio would be less than 1.0 to 1.0.
The Term Loan Facility will be subject to amortization
payments of 1.00% per year, payable quarterly, commencing on June 30, 2021. The remaining balance of the Term Loans will be due and payable
in a single payment on its maturity date on April 21, 2028. The Revolving Loans, if any, will be repaid in a single installment on its
maturity date on April 21, 2025.
The New Loan Facilities also contain mandatory prepayment
provisions, which may require United in certain instances to prepay obligations owing under the New Loan Facilities and/or other Priority
Lien Debt in connection with dispositions of collateral or upon failure to comply with a semi-annual minimum Collateral Coverage Ratio
(subject to certain cure rights). Additionally, the Revolving Credit Facility requires that we prepay the Revolving Loans if a Change
of Control (as defined in the Revolving Credit Facility) occurs and the Term Loan Facility requires that we make an offer to prepay the
Term Loans if a Change of Control Triggering Event (as defined in the Term Loan Facility) occurs. Any voluntary prepayment of the Term
Loans during the first year after the closing date of the Term Loan Facility will be subject to a prepayment premium in an amount equal
to the present value of interest payments through the first anniversary of the closing date plus 2% and a voluntary prepayment premium
during the second year after the closing of 2% (after which no prepayment premium will be payable), in each case calculated on the amounts
prepaid. In no event will a prepayment premium be payable for a mandatory prepayment or acceleration.
The New Loan Facilities contain negative covenants
that, among other things, limit our ability under certain circumstances to create liens on the Collateral, make certain dividends, stock
repurchases, restricted investments and other restricted payments, and consolidate, merge, sell, or otherwise dispose of all or substantially
all of our assets. The New Loan Facilities also contain financial covenants which require us to maintain the following:
Minimum Collateral Coverage Ratio
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1.60:1
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Minimum Liquidity (as defined in each New Loan
Facility)
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$
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2,000,000,000
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The New Loan Facilities contain events of default
customary for similar financings, including a cross-default and cross-acceleration to other material indebtedness. Upon the occurrence
and continuation of an event of default (other than an event of default relating to certain bankruptcy or insolvency events of United),
the outstanding obligations under the New Loan Facilities may be accelerated and become due and payable immediately and our cash may be
restricted. Upon the occurrence of an event of default relating to certain bankruptcy or insolvency events of United, the outstanding
obligations under the New Loan Facilities shall be accelerated and become due and payable immediately.
The Indenture is filed herewith as Exhibit 4.1, and
is incorporated by reference herein. The form of the 2026 Notes and the form of the Notation of Guarantee for the 2026 Notes are filed
herewith as Exhibit 4.2 and Exhibit 4.3, respectively, and are incorporated by reference herein. The form of the 2029 Notes and the form
of the Notation of Guarantee for the 2029 Notes are filed herewith as Exhibit 4.4 and Exhibit 4.5, respectively, and are incorporated
by reference herein. The Term Loan Facility is filed herewith as Exhibit 10.1, and is incorporated by reference herein. The Revolving
Credit Facility is filed herewith as Exhibit 10.2, and is incorporated by reference herein. The foregoing descriptions of the Indenture,
the Notes, the Guarantees, the Term Loan Facility and the Revolving Credit Facility are summaries only and are qualified in their entirety
by reference to the full text of such documents.