Delta Airlines 2010 Annual Report Download - page 73

Table of Contents
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.
Borrowings under the Term Facility must be repaid in an amount equal to 1% of the original principal amount of the term loans annually (to be paid in
equal quarterly installments), with the balance of the term loans due and payable in September 2013. Borrowings under the Term Facility bear interest at a
variable rate equal to LIBOR or another index rate, in each case plus a specified margin. As of December 31, 2010, the Term Facility had an interest rate of
8.8% per annum.
In 2009, we borrowed and subsequently repaid the entire amount of the Revolving Facility, which matures in March 2013. Borrowings under the
Revolving Facility can be repaid without penalty and amounts repaid can be reborrowed. Borrowings under the Revolving Facility bear interest at a variable
rate equal to LIBOR or another index rate, in each case plus a specified margin. As of December 31, 2010, the Revolving Facility was undrawn.
The Senior Secured Credit Facilities contain affirmative and negative covenants and default provisions that are substantially similar to the ones described
under "Senior Secured Exit Financing Facilities" above. The Senior Secured Credit Facilities also contain financial covenants that require us to:
• maintain a minimum fixed charge coverage ratio (defined as the ratio of (1) EBITDAR (excluding gains and losses arising under fuel hedging
arrangements incurred prior to the closing date of the Senior Secured Credit Facilities) to (2) the sum of cash interest expense plus cash aircraft rent
expense plus the interest portion of Delta's capitalized lease obligations) in each case for the 12-month period ending as of the last day of each fiscal
quarter of not less than 1.20:1;
• maintain a minimum collateral coverage ratio (defined as the ratio of aggregate current fair market value of the collateral to the sum of the aggregate
outstanding exposure under the Senior Secured Credit Facilities and certain obligations with equal rights to payment and collateral and the aggregate
principal amount of the outstanding Senior Secured Notes) of 1.60:1; and
• maintain unrestricted cash, cash equivalents, short-term investments and availability under other undrawn revolving credit facilities of not less than
$2 billion.
The Senior Secured Credit Facilities also contain mandatory prepayment provisions that require us in certain instances to prepay obligations under the
Senior Secured Credit Facilities in connection with dispositions of collateral. In addition, if the collateral coverage ratio is less than 1.60:1, we must either
provide additional collateral in the form of cash or additional routes and slots to secure our obligations, or we must repay the loans under the Senior Secured
Credit Facilities by an amount necessary to comply with the collateral coverage ratio.
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