United Airlines 2014 Annual Report Download - page 100

Table of Contents
As of December 31, 2014, a substantial portion of the Company’s assets, principally aircraft, route authorities and certain other intangible assets, were
pledged under various loan and other agreements. As of December 31, 2014, UAL and United were in compliance with their respective debt covenants.
Continued compliance depends on many factors, some of which are beyond the Company’s control, including the overall industry revenue environment and
the level of fuel costs.

2013 Credit and Guaranty Agreement. On March 27, 2013, United and UAL entered into the Credit and Guaranty Agreement (the “Credit Agreement”) as the
borrower and guarantor, respectively. The Company’s Credit Agreement originally consisted of a $900 million term loan due April 1, 2019 and a $1.0 billion
revolving credit facility available for drawing until April 1, 2018.
On March 27, 2013, the Company used $900 million from the Credit Agreement, together with approximately $300 million of cash, to retire the entire
principal balance of a $1.2 billion term loan due 2014 that was outstanding under United’s Amended and Restated Revolving Credit, Term Loan and
Guaranty Agreement, dated as of February 2, 2007 (the “Amended Credit Facility”). The Amended Credit Facility was terminated concurrently with the
repayment of the term loan.
In March 2014, United amended the Credit Agreement to reduce the interest rate payable on the existing $893 million term loan from LIBOR plus a margin
of 3.0% per annum to LIBOR plus a margin of 2.75% per annum, subject to a 0.75% floor. Borrowings under the revolving credit facility under the Credit
Agreement bear interest at a variable rate equal to LIBOR plus a margin of 3.0% per annum, or another rate based on certain market interest rates, plus a
margin of 2.0% per annum. The principal amount of the term loan must be repaid in consecutive quarterly installments of 0.25% of the original principal
amount thereof, commencing on June 30, 2013, with any unpaid balance due on April 1, 2019. United may prepay all or a portion of the loan from time to
time, at par plus accrued and unpaid interest. United pays a commitment fee equal to 0.75% per-annum on the undrawn amount available under the revolving
credit facility.
The Credit Agreement requires United to repay the term loan and any other outstanding borrowings under the Credit Agreement at par plus accrued and
unpaid interest if certain changes of control of UAL occur.
In September 2014, United borrowed a $500 million term loan under the Credit Agreement, of which $499 million is outstanding. The loan is due September
2021 and bears interest at LIBOR plus a margin of 3.0% per annum, subject to a 0.75% floor. The $500 million term loan ranks pari passu with the $900
million term loan that United originally borrowed under the Credit Agreement, of which $884 million is outstanding. Also in September 2014, UAL amended
its revolving credit facility under the Credit Agreement increasing the capacity from $1.0 billion to $1.35 billion and establishing the maturity date for
$1.315 billion in lender commitments as January 2, 2019.
As of December 31, 2014, United had its entire capacity of $1.35 billion available under the revolving credit facility of the Company’s Credit Agreement.
As of December 31, 2014, United had cash collateralized $74 million of letters of credit. United also had $410 million of performance bonds and letters of
credit relating to various real estate, customs and aircraft financing obligations at December 31, 2014. Most of the letters of credit have evergreen clauses and
are expected to be renewed on an annual basis and the performance bonds have expiration dates through 2019.
6.75% Senior Secured Notes due 2015. In September 2014, United retired, at par, the entire $800 million principal balance of its 6.75% Senior Secured Notes
due 2015, which had originally been issued in August 2010.
EETCs. United has $7.2 billion principal amount of equipment notes outstanding issued under EETC financings included in notes payable in the table of
outstanding debt above. Generally, the structure of these EETC financings consist of pass-through trusts created by United to issue pass-through certificates,
which represent fractional undivided interests in the respective pass-through trusts and are not obligations of United. The proceeds of the issuance of the
pass-through certificates are used to purchase equipment notes which are issued
100