Kilpatrick Stockton lawyers served as Delta Air Lines bond counsel in the company’s recent plan for two private debt offerings worth $1 billion.
Partner Benjamin W. Barkley confirmed that he and partner David M. Eaton, along with attorneys in the firm’s tax, employee benefits and environmental groups worked on the deal.
The offerings, which have not yet closed, are structured as high-yield private placements under Rule 144A of the Securities Act. The first $500 million in senior secured notes will be due in 2014; the additional $500 million in second-lien notes will be due in 2015. Both are part of the airline’s plan to refinance some $1.5 billion in debt, including repayment of outstanding debt under Northwest Airlines’ senior corporate credit facility. Delta and Northwest merged last year.
The unusual aspect of the deal, said Barkley, is the way it is secured. Rather than being secured by equipment or airplanes, he said, “These bonds are secured … by Delta’s Pacific route system, so basically it is their authority from the U.S. and Japanese governments to fly to Japan and Asia and places like that; and their slots—the right to fly at a particular time and in a particular airspace; and then their gates, which is the right to fly into a particular space.”
Barkley said Delta used similar securitization when it acquired Northwest. “It’s been done before,” he said, “but it is just sort of unusual.”
Davis Polk & Wardwell in New York also worked on the deal, handling aspects of the loan for Delta.