American Airlines is seeking to reassure objectors to the proposed collateral of its up to $3.25 billion South American route financing.
The Fort Worth-based carrier says that the debt, known as the SGR financing, would only be secured by unencumbered "slots, gates and route authorities" and excludes property that is subject to transfer restrictions, including some airport leases, in a bankruptcy court filing on 6 May.
Bank of New York (BNY) Mellon and Wilmington Trust raised concerns regarding whether the collateral would include assets that secure existing American debt financings, and Dallas-Fort Worth International airport filed an objection citing language in its lease with American that bars the airline from using facilities at the airport as collateral, in court filings earlier this month.
American plans to secure the proposed debt with slots, gates and route authorities associated with its South American operation, and possibly with its Central American and Mexico operations, according to a filing on 25 April.
The SGR financing would be split between an up to $2.25 billion secured term loan with a six-year tenor and a $1 billion revolving credit facility with a five-year tenor.
Proceeds would be split between partially repaying $450 million in outstanding principal and $73 million in outstanding interest payments on its 10.5% senior secured notes that were due in October 2012, and to boost liquidity.
Barclays Capital, Citi, Deutsche Bank, Goldman Sachs, JP Morgan and Morgan Stanley have provided American with commitments to act as joint lead arrangers of the debt. Rothschild is financial adviser to the airline.