American Airlines talks $1 billion five-year notes with 7%-7¼% yield

By Paul A. Harris

Portland, Ore., March 8 - American Airlines, Inc. talked a $1 billion offering of five-year senior secured first-lien notes (B2/B+/) with a 7% to 7¼% yield on Tuesday, according to an informed source.

The order book closes at 10 a.m. ET on Wednesday.

Citigroup Global Markets Inc. is the left bookrunner for the Rule 144A and Regulation S for life offering. Credit Suisse and J.P. Morgan Securities LLC are the joint bookrunners.

The notes will be callable with a Treasuries plus 50 basis points make-whole call for the first two years and will then become callable at a premium. In addition, a special call provision allows the company to redeem up to 10% of the issue annually at 103 during the non-call period.

The notes will feature a three-year 35% equity clawback and a 101% poison put.

The notes will be secured by a senior lien on certain route authorities, slots, and gate leaseholds, in each case that the company uses to provide the scheduled services.

The notes will feature standard high-yield covenants.

The Fort Worth, Texas-based commercial air carrier plans to use the proceeds for general corporate purposes.

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