Spirit Airlines enters Chapter 11 proceedings, restructuring support agreement

Spirit Airlines (SAVE) announced that it has entered into a restructuring support agreement, or RSA, supported by a supermajority of Spirit’s loyalty and convertible bondholders on the terms of a balance sheet restructuring. The restructuring is expected to reduce Spirit’s debt and provide increased financial flexibility. In connection with the RSA, Spirit has received backstopped commitments for a $350M equity investment from existing bondholders and will complete a deleveraging transaction to equitize $795M of funded debt. To implement the RSA, the company has commenced a prearranged chapter 11 process in the United States Bankruptcy Court for the Southern District of New York. Existing bondholders are also providing $300M in debtor-in-possession, or DIP, financing, which, together with Spirit’s available cash reserves and cash provided by operations, is expected to further support the company through the chapter 11 process. Spirit expects to continue operating its business in the normal course throughout this prearranged, streamlined chapter 11 process. Guests can continue to book and fly without interruption and can use all tickets, credits and loyalty points as normal. The chapter 11 process itself will not impact team member wages or benefits, which are continuing to be paid and honored for those employed by Spirit. Vendors, aircraft lessors and holders of secured aircraft indebtedness will continue to be paid in the ordinary course and will not be impaired. In conjunction with the petition, Spirit has filed a series of first-day motions, which, once approved by the court, will further facilitate the company operating its business in the ordinary course during the streamlined chapter 11 process. As a result of the chapter 11 filing, Spirit expects to be delisted from the New York Stock Exchange in the near term. The company expects that its common stock will continue to trade in the over-the-counter marketplace through the chapter 11 process. The shares are expected to be cancelled and have no value as part of Spirit’s restructuring.