HAWAIIAN AIRLINES ANNOUNCES LAUNCH OF PRIVATE EXCHANGE OFFER FOR ANY AND ALL OF ITS OUTSTANDING 5.750% SENIOR SECURED NOTES DUE 2026 AND CONSENT SOLICITATION

Rhea-AI Summary

Hawaiian Airlines announced an exchange offer for its outstanding 5.750% Senior Secured Notes due 2026. The offer includes swapping these notes for new 11.000% Senior Secured Notes due 2029 and cash. Eligible Holders will get $825 in new notes and $175 in cash per $1,000 principal of existing notes if exchanged by July 9, 2024, or $125 in cash if exchanged by July 24, 2024. Nearly 50% of the note holders are expected to participate. The offer is subject to conditions, including a minimum participation threshold. Noteholders who are qualified institutional buyers or non-U.S. persons can participate.

Positive

• Holders receive higher interest rates with new 11.000% Senior Secured Notes.
• Nearly 50% of noteholders are expected to participate, indicating strong support.

Negative

• The exchange offer requires a high minimum participation threshold of $1,140,000,000.
• Holders not meeting the early exchange deadline receive less cash.
• The 2029 notes come with significant restrictions on transfer and resale.

Insights

Financial Analyst

Hawaiian Airlines' announcement regarding the exchange offer for their outstanding 5.750% Senior Secured Notes due 2026, for 11.000% Senior Secured Notes due 2029 and accompanying cash incentives provides vital insights into the company's financial strategy and its ability to manage debt effectively.

From a financial perspective, this move can be interpreted as a way to extend the debt maturity profile, allowing the company more breathing room to manage its cash flows. The significant increase in interest rate from 5.750% to 11.000% reflects the company's current cost of borrowing and the need to incentivize investors to participate in the exchange offer. While this is a substantial rise, the extended maturity could help the company manage near-term liquidity pressures.

For retail investors, it’s important to note that the company already has indications from holders of nearly 50% of the existing notes to participate. This offers some confidence but also highlights the need for careful monitoring as the acceptance rate will impact future financial stability. The terms set, especially the minimum participation condition of $1,140,000,000, underline the company's critical threshold for the success of this transaction.

Potential benefits include enhanced liquidity and deferred debt repayments, which can positively impact stock prices in the short term due to improved immediate financial health. However, the high-interest burden in the long term could affect profitability. The overall impact will significantly depend on how effectively the company utilizes the additional time provided through this debt restructuring.

Legal Expert

The legal implications of Hawaiian Airlines’ exchange offer and consent solicitation are critical for investors to understand. The structure of the exchange offer, particularly the conditions and eligibility criteria, ensures compliance with Securities Act regulations and caters to qualified institutional buyers and non-U.S. persons. This reflects the company's meticulous approach to adhere to legal standards while attempting to optimize their financial structure.

The stipulation that consents to proposed amendments can only be delivered by those who tender their existing notes ensures that only those actively participating in the exchange can influence the terms. This is a strategic legal move to maintain control over the debt restructuring process. Furthermore, the ability to waive the minimum participation condition if a significant but lesser amount is tendered demonstrates flexibility, catering to dynamic market responses while still adhering to preset legal frameworks.

For investors, understanding these legal stipulations is crucial. It highlights the importance the company places on regulatory compliance, which can be reassuring. However, it also means that there are significant restrictions on who can participate and how the new notes can be sold or transferred in the future.

HONOLULU, June 24, 2024 /PRNewswire/ -- Hawaiian Airlines, Inc. (the "Company") today announced that Hawaiian Brand Intellectual Property, Ltd. (the "Brand Issuer"), an exempted company incorporated with limited liability under the laws of the Cayman Islands and an indirect wholly owned subsidiary of the Company, and HawaiianMiles Loyalty, Ltd. (the "Loyalty Issuer", and, together with the Brand Issuer, the "Issuers" and each, an "Issuer"), have commenced an offer to exchange (the "Exchange Offer") any and all of their outstanding 5.750% Senior Secured Notes due 2026 (the "Existing Notes") held by Eligible Holders, as defined below, for the Issuers' 11.000% Senior Secured Notes due 2029 (the "New Notes") and cash. 

Exchange Consideration per $1,000 Principal Amount of 2026 Notes Tendered

Total Consideration for 2026 Notes Tendered On or Prior to the Early Exchange Time

Exchange Consideration Amount for each $1,000 Principal Amount of 2026 Notes Tendered After the Early Exchange Time

Notes to be Exchanged

CUSIP/ISINs Nos.

Outstanding Principal Amount

11.000% Senior Secured Notes due 2029

Cash

11.000% Senior Secured Notes due 2029

Cash

5.750% Senior Secured Notes due 2026

41984LAA5; US41984LAA52 G4404LAA8; USG4404LAA82

$1,200,000,000

$825.0

$175.0

$825.0

$125.0

Prior to the launch of the Exchange Offer and Consent Solicitation, holders of the Existing Notes representing nearly 50% of the aggregate principal amount of the Existing Notes outstanding (the "Supporting Holders") have indicated their intent to participate in the Exchange Offer and Consent Solicitation, but no assurance can be given that any such Supporting Holder will participate.

In connection with the Exchange Offer, the Issuers are soliciting (the "Consent Solicitation" and, together with the Exchange Offer, the "Exchange Offer and Consent Solicitation") consents (the "Consents") to the adoption of certain amendments (the "Proposed Amendments") to the indenture governing the Existing Notes. Eligible Holders who tender their Existing Notes pursuant to the Exchange Offer must also deliver Consents to the Proposed Amendments. Eligible Holders may not deliver Consents to the Proposed Amendments without also validly tendering their Existing Notes. 

The Exchange Offer and Consent Solicitation is being made solely to Eligible Holders upon the terms and subject to the conditions set forth in the confidential offering memorandum and solicitation statement (the "Offering Memorandum"), and the related letter of transmittal (the "Letter of Transmittal" and together with the Offering Memorandum, the "Exchange Offer Materials"), each dated June 24, 2024.

The Exchange Offer and Consent Solicitation is being made only (a) in the United States, to holders of Existing Notes who are reasonably believed to be "qualified institutional buyers," as defined in Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), and (b) outside the United States, to holders of Existing Notes who are not "U.S. persons" (as defined in Regulation S under the Securities Act) in offshore transactions in compliance with Regulation S.  We refer to the holders of Existing Notes who have certified that they are eligible to participate in the Exchange Offer and Consent Solicitation pursuant to at least one of the foregoing conditions as "Eligible Holders."

Upon the terms and subject to the conditions of the Exchange Offer, Eligible Holders that validly tender their Existing Notes at or prior to 5:00 p.m., New York City Time, on July 9, 2024 (the "Early Exchange Time"), and whose tenders are accepted for exchange by the Issuers, will receive $825.0 of New Notes and $175.0 cash for every $1,000 principal amount of the Existing Notes.

Upon the terms and subject to the conditions of the Exchange Offer, Eligible Holders that validly tender, and do not validly withdraw, their Existing Notes after the Early Exchange Time but at or prior to 5:00 p.m., New York City Time, on July 24, 2024 (the "Expiration Time"), and whose tenders are accepted for exchange by the Issuers, will receive $825.0 of New Notes and $125.0 cash for every $1,000 principal amount of the Existing Notes.

In addition, holders of Existing Notes validly tendered (and not validly withdrawn) in the Exchange Offer will receive on the settlement date accrued and unpaid interest to, but not including, the settlement date in cash on all such Existing Notes validly tendered and accepted for exchange pursuant to the Exchange Offer.

Tenders of Existing Notes may only be withdrawn at or prior to 5:00 p.m., New York City time, on July 9, 2024 (the "Withdrawal Deadline").

Consummation of the Exchange Offer and Consent Solicitation is conditioned upon the satisfaction or waiver of the conditions set forth in the Exchange Offer Materials. The Exchange Offer and Consent Solicitation is conditioned upon Eligible Holders validly tendering and not validly withdrawing at least $1,140,000,000 aggregate principal amount of Existing Notes (the "Minimum Participation Condition"), provided however, that (i) if Eligible Holders shall have validly tendered and not validly withdrawn at least $800,000,000, but less than $1,140,000,000, aggregate principal amount of Existing Notes, the Issuers may accept for exchange such Existing Notes in their sole and absolute discretion and shall have the right to waive the Minimum Participation Condition without extending the Withdrawal Deadline or Expiration Time and (ii) if Eligible Holders shall have validly tendered and not validly withdrawn less than $800,000,000 aggregate principal amount of Existing Notes, the Issuers shall not accept for payment such Existing Notes and the Issuers shall not have the right to waive the Minimum Participation Condition. In addition, the Exchange Offer and Consent Solicitation may be terminated or withdrawn at any time, in the Issuers' sole and absolute discretion, subject to compliance with applicable law.

The complete terms and conditions of the Exchange Offer and Consent Solicitation are described in the Exchange Offer Materials, copies of which may be obtained by Eligible Holders by contacting Global Bondholder Services Corporation, Attn: Corporate Action, 65 Broadway, Suite 404, New York, New York 10006, telephone number: (855) 654-2015 (toll-free) or (212) 430-3774 (for Banks and Brokers) to complete the eligibility process. The eligibility certificate is available electronically at: https://gbsc-usa.com/eligibility/hawaiian and is also available by contacting Global Bondholder Services Corporation. Holders of Existing Notes that are not Eligible Holders will not be able to receive such documents, but may call us at the numbers set forth above for further instructions.

This press release is for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell any securities.  The Exchange Offer and Consent Solicitation is being made and the New Notes are being offered only to "qualified institutional buyers" and holders that are not "U.S. persons" as such terms are defined under the Securities Act. The New Notes have not been registered under the Securities Act or under any state securities laws, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act, and, accordingly, are subject to significant restrictions on transfer and resale as more fully described in the Exchange Offer Materials. The Exchange Offer and Consent Solicitation is subject to the terms and conditions set forth in the Exchange Offer Materials.

About Hawaiian Airlines

Now in its 95th year of continuous service, Hawaiian is Hawaiʻi's largest and longest-serving airline. Hawaiian offers approximately 150 daily flights within the Hawaiian Islands, and nonstop flights between Hawaiʻi and 16 U.S. gateway cities – more than any other airline – as well as service connecting Honolulu and American Samoa, Australia, Cook Islands, Japan, New Zealand, South Korea and Tahiti.

Consumer surveys by Condé Nast Traveler and TripAdvisor have placed Hawaiian among the top of all domestic airlines serving Hawaiʻi. The carrier was named Hawaiʻi's best employer by Forbes in 2022 and has topped Travel + Leisure's World's Best list as the No. 1 U.S. airline for the past two years. Hawaiian has also led all U.S. carriers in on-time performance for 18 consecutive years (2004-2021) as reported by the U.S. Department of Transportation.

The airline is committed to connecting people with aloha by offering complimentary meals for all guests on transpacific routes and the convenience of no change fees on Main Cabin and Premium Cabin seats. HawaiianMiles members also enjoy flexibility with miles that never expire. As Hawai'i's hometown airline, Hawaiian encourages guests to Travel Pono and experience the islands safely and respectfully.

Hawaiian Airlines, Inc. is a subsidiary of Hawaiian Holdings, Inc. (NASDAQ: HA). Additional information is available at HawaiianAirlines.com. Follow Hawaiian's Twitter updates (@HawaiianAir), become a fan on Facebook  (Hawaiian Airlines), and follow us on Instagram (hawaiianairlines). For career postings and updates, follow Hawaiian's LinkedIn page.

For media inquiries, please visit Hawaiian Airlines' online newsroom.

Cautionary Note Regarding Forward-Looking Statements

This press release may contain information that includes or is based upon forward-looking statements. Forward-looking statements give expectations or forecasts of future events. These statements can be identified by the fact that they do not relate strictly to historical or current facts. They use words such as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "potential," and "will," and other words and terms of similar meaning, or are tied to future periods, in connection with a discussion of future operating or financial performance. In particular, these include statements relating to future actions, including the satisfaction of the conditions to the Exchange Offer and Consent Solicitation and the completion of the proposed Exchange Offer and Consent Solicitation.

Any or all forward-looking statements may turn out to be wrong. They can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Many such factors will be important in determining the actual future results of the Issuers, the Company and their subsidiaries and affiliates. These statements are based on current expectations and the current economic environment. They involve several risks and uncertainties that are difficult to predict. These statements are not guarantees of future performance. Actual results could differ materially from those expressed or implied in the forward-looking statements. Risks, uncertainties, and other factors that might cause such differences include the risks, uncertainties and other factors identified herein.  The Company does not undertake any obligation to publicly correct or update any forward-looking statement if the Company later becomes aware that such statement is not likely to be achieved.

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SOURCE Hawaiian Airlines, Inc.

FAQ

What is Hawaiian Airlines' exchange offer for HA notes?

Hawaiian Airlines is offering to exchange its 5.750% Senior Secured Notes due 2026 for new 11.000% Senior Secured Notes due 2029 and cash.

When is the early exchange deadline for Hawaiian Airlines' notes?

The early exchange deadline is 5:00 p.m. New York City Time on July 9, 2024.

What do noteholders receive for exchanging Hawaiian Airlines' HA notes early?

Eligible Holders will receive $825 in new notes and $175 in cash per $1,000 principal amount of existing notes if exchanged by July 9, 2024.

What are the terms of the new notes offered by Hawaiian Airlines?

The new notes are 11.000% Senior Secured Notes due 2029, offered in exchange for the existing 5.750% notes due 2026.

What is the minimum participation condition for Hawaiian Airlines' exchange offer?

The minimum participation condition requires at least $1,140,000,000 of the aggregate principal amount of existing notes to be tendered.