Southwest Airlines 1999 Annual Report Download - page 36

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French banking partnerships. For presentation purposes, the Company has classified
these identical borrowings as one $56 million transaction. The effective rate of interest over
the 13-year term of the loans is LIBOR plus 32 basis points. Principal and interest are
payable semi-annually on June 30 and December 31 for each of the loans and the
Company may terminate the arrangements in any year on either of those dates, with certain
conditions. The Company has pledged two aircraft as collateral for the entire transaction.
On February 28, 1997, the Company issued $100 million of senior unsecured 7
3/8% Debentures due March 1, 2027. Interest is payable semi-annually on March 1 and
September 1. The Debentures may be redeemed, at the option of the Company, in whole
at any time or in part from time to time, at a redemption price equal to the greater of the
principal amount of the Debentures plus accrued interest at the date of redemption or the
sum of the present values of the remaining scheduled payments of principal and interest
thereon, discounted to the date of redemption at the comparable treasury rate plus 20
basis points, plus accrued interest at the date of redemption.
On March 7, 1995, the Company issued $100 million of senior unsecured 8% Notes
due March 1, 2005. Interest is payable semi-annually on March 1 and September 1. The
Notes are not redeemable prior to maturity.
On September 9, 1992, the Company issued $100 million of senior unsecured 7
7/8% Notes due September 1, 2007. Interest is payable semi-annually on March 1 and
September 1. The Notes are not redeemable prior to maturity.
During 1991, the Company issued $100 million of senior unsecured 9.4% Notes
and $100 million of senior unsecured 8 3/4% Notes due July 1, 2001, and October 15,
2003, respectively. Interest on the Notes is payable semi-annually. The Notes are not
redeemable prior to maturity.
In addition to the credit facilities described above, Southwest has an unsecured
Bank Credit Agreement with a group of banks that permits Southwest to borrow through
May 6, 2002, on a revolving credit basis, up to $475 million. Interest rates on borrowings
under the Credit Agreement can be, at the option of Southwest, the greater of the agent
bank’s prime rate or the federal funds rate plus .5 percent, .17 percent over LIBOR, or a
fixed rate offered by the banks at the time of borrowing. The commitment fee is .08 percent
per annum. There were no outstanding borrowings under this agreement, or prior similar
agreements, at December 31, 1999 or 1998.