On 28 October 2019, Virgin Australia Holdings Limited (“VAH” / the “Issuer”) launched an offer for Virgin Australia Notes (prospective ASX Code: VAHHA, the “Notes”). The offer size is guided to be $150 million, with the ability to raise more or less. The Notes are structured as direct, unconditional, unsubordinated and unsecured obligations of the Issuer and the Guarantors. The Notes rank pari passu with all other unsecured and unsubordinated obligations of the Issuer and the Guarantors (other than those mandatorily preferred by law), including existing unlisted A$ and US$ notes.
Distributions are non-discretionary, fixed-rate and paid on a semi-annual basis in arrears until redeemed. The Notes pay Interest on a gross (unfranked) basis in arrears and are expected to be issued on 26 November 2019 with the fixed rate expected to be 8.00%, equating to a trading margin above the interpolated swap rate of ~7.00%.
The Notes have a Maturity Date of 26 November 2024 but the Issuer may Redeem the Notes at any time before this date subject to either a make-whole or fixed-price premium. Additionally, the Issuer may elect to Redeem all (but not some) of the Notes following a Tax or Clean-up Event at par ($100) plus accrued interest.
Noteholders are protected via a Noteholder put where, following a Change of Control Event, the Issuer must Redeem the Notes of any Noteholders requesting redemption at $101 plus accrued interest. Additionally, there are covenants which are similar to VAH’s existing AMTN Notes and also cross default clauses applicable to more restrictive covenants in VAH’s other existing instruments. Mandatory redemption can also occur if the Velocity acquisition fails to complete by 13 December 2019.
* Subject to change, offer size is $150 million, with the ability to raise more or less.
** Based on guided coupon rate.
*** Based on guided coupon rate and an interpolated swap rate of ~1.00% to legal final maturity of 26 November 2024
All pricing as of close 24 October 2019.