Delta Airlines 2009 Annual Report Download - page 87

Table of Contents
Senior Secured Exit Financing Facilities due 2012 and 2014
In connection with Delta's emergence from bankruptcy in April 2007, we entered into a senior secured exit financing facility (the "Senior Secured Exit
Financing Facilities") to borrow up to $2.5 billion. The Senior Secured Exit Financing Facilities consist of a $1.0 billion first-lien revolving credit facility (the
"Exit Revolving Facility"), a $600 million first-lien synthetic revolving facility (the "Synthetic Facility") (together with the Exit Revolving Facility, the "First-
Lien Facilities"), and a $900 million second-lien term loan facility (the "Term Loan" or the "Second-Lien Facility"). During 2008, we borrowed the entire
amount of the Exit Revolving Facility. Borrowings under the First-Lien Facilities are due in April 2012 and borrowings under the Second-Lien Facility are
due in April 2014. As of December 31, 2009, the Senior Secured Exit Financing Facilities had interest rates ranging from 2.3% to 3.5% per annum.
Our obligations under the Senior Secured Exit Financing Facilities are guaranteed by substantially all of our domestic subsidiaries (the "Guarantors"). The
Senior Secured Exit Financing Facilities and the related guarantees are secured by liens on substantially all of our and the Guarantors' present and future
assets that do not secure other financings (the "Collateral"). The First-Lien Facilities are secured by a first priority security interest in the Collateral. The
Second-Lien Facility is secured by a second priority security interest in the Collateral.
The Senior Secured Exit Financing Facilities include affirmative, negative and financial covenants that restrict our ability to, among other things, incur
additional secured indebtedness, make investments, sell or otherwise dispose of assets if not in compliance with the collateral coverage ratio tests, pay
dividends or repurchase stock. These covenants may have a material adverse impact on our operations. The Senior Secured Exit Financing Facilities contain
financial covenants that require us to:
• maintain a minimum fixed charge coverage ratio (defined as the ratio of (1) earnings before interest, taxes, depreciation, amortization and aircraft
rent, and subject to other adjustments to net income ("EBITDAR") to (2) the sum of gross cash interest expense, cash aircraft rent expense and the
interest portion of our capitalized lease obligations, for successive trailing 12-month periods ending at each quarter-end date through the maturity
date of the respective Senior Secured Exit Financing Facilities), which minimum ratio is 1.20:1 in the case of the First-Lien Facilities and 1.02:1 in
the case of the Second-Lien Facility;
• maintain unrestricted cash, cash equivalents and permitted investments of not less than $750 million in the case of the First-Lien Facilities and
$650 million in the case of the Second-Lien Facility;
• maintain a minimum total collateral coverage ratio (defined as the ratio of (1) certain of the Collateral that meets specified eligibility standards
("Eligible Collateral") to (2) the sum of the aggregate outstanding exposure under the First-Lien Facilities and the Second-Lien Facility and the
aggregate termination value of certain hedging agreements) of 125% at all times; and
• in the case of the First-Lien Facilities, also maintain a minimum first-lien collateral coverage ratio (together with the total collateral coverage ratio
described above, the "collateral coverage ratios") (defined as the ratio of (1) Eligible Collateral to (2) the sum of the aggregate outstanding exposure
under the First Lien Facilities and the aggregate termination value of certain hedging agreements) of 175% at all times.
If the collateral coverage ratios are not maintained, we must either provide additional collateral to secure our obligations, or we must repay the loans under
the Senior Secured Exit Financing Facilities by an amount necessary to maintain compliance with the collateral coverage ratios.
The Senior Secured Exit Financing Facilities contain events of default customary for senior secured exit financings, including cross-defaults to other
material indebtedness and certain change of control events. The Senior Secured Exit Financing Facilities also include events of default specific to our
business, including the suspension of all or substantially all of our flights and other operations for more than two consecutive days (other than as a result of a
Federal Aviation Administration suspension due to extraordinary events similarly affecting other major U.S. air carriers). Upon the occurrence of an event of
default, the outstanding obligations under the Senior Secured Exit Financing Facilities may be accelerated and become due and payable immediately and our
cash may become restricted.
Senior Secured Credit Facilities due 2013
In 2009, we entered into a first-lien revolving credit facility in the aggregate principal amount of $500 million (the "Revolving Facility") and a first-lien
term loan facility in the aggregate principal amount of $250 million (the "Term Facility" and collectively with the Revolving Facility, the "Senior Secured
Credit Facilities"). The Senior Secured Credit Facilities are guaranteed by the Guarantors and are secured by a first lien on our Pacific route authorities and
certain related assets (the "Pacific Collateral"). Lenders under the Senior Secured Credit Facilities and holders of the Senior Secured Notes (as described
below) have equal rights to payment and collateral. 82