Business Context and Reporting Period
This Form 8-K Current Report was filed by Delta Air Lines, Inc. on March 14, 2017, regarding an event that occurred on March 9, 2017. The filing details the entry into a material definitive agreement to issue unsecured notes.
Key Financial Metrics and Transaction Details
The company completed a public offering of $2.0 billion in aggregate principal amount of unsecured notes. The transaction consists of two tranches:
- 2020 Notes: $1.0 billion aggregate principal amount with a coupon rate of 2.875%, maturing on March 13, 2020.
- 2022 Notes: $1.0 billion aggregate principal amount with a coupon rate of 3.625%, maturing on March 15, 2022.
Interest is payable semi-annually in arrears. The notes rank pari passu with all other unsubordinated indebtedness and are senior to future subordinated debt. The filing does not provide specific values for revenue, profit, cash flow, margins, or existing liquidity metrics, as this report focuses solely on the debt issuance.
Material Changes and Use of Proceeds
The primary material change is the increase in long-term debt obligations by $2.0 billion. Delta Air Lines intends to use the net proceeds from this offering to fund discretionary contributions to its defined benefit plans. The offering was completed on March 14, 2017, pursuant to an automatic shelf registration statement filed on March 6, 2017.
Terms, Covenants, and Risks
The Indenture governing the notes includes standard covenants limiting the company's ability to incur liens securing indebtedness or engage in mergers and consolidations, subject to exceptions. Key terms include:
- Redemption: The 2020 Notes may be redeemed at any time prior to maturity. The 2022 Notes may be redeemed prior to February 15, 2022, at an applicable redemption price, and at 100% of principal plus accrued interest on or after that date.
- Change of Control: If a Change of Control occurs followed by a ratings decline to below investment grade, the company must offer to repurchase the notes at 101% of the principal amount plus accrued interest.
- Underwriters: Barclays Capital Inc., Goldman, Sachs & Co., J.P. Morgan Securities LLC, and Morgan Stanley & Co. LLC served as representatives.
Investor Verification Checklist
- Verify the exact net proceeds received after deducting underwriting discounts and commissions.
- Confirm the specific amount of discretionary contributions to defined benefit plans funded by this issuance.
- Review the full text of the Underwriting Agreement (Exhibit 1.1) and Supplemental Indenture (Exhibit 4.1) for detailed covenants and exceptions.
- Check subsequent filings for any changes in credit ratings that could trigger the Change of Control repurchase provision.