New Issue: Delta Air Lines prices upsized $1.35 billion of notes in two parts

By Paul A. Harris

St. Louis, Sept. 23 - Delta Air Lines, Inc. priced an upsized and restructured $1.35 billion two-part offering of notes Wednesday, according to an informed source.

The Atlanta-based passenger air carrier priced $750 million of 9½% five-year senior secured notes (Ba2/BB/) at 98.563 to yield 9 7/8%, on top of price talk.

In a tranche announced on Tuesday, Delta priced an upsized $600 million issue of 11¾% senior second-lien notes due March 15, 2015 (B2) at 95.288 to yield 13%. The second-lien notes, which were upsized from $500 million, also came on top of the price talk.

J.P. Morgan Securities Inc., Barclays Capital Inc. and UBS Investment Bank were joint bookrunners for the Rule 144A for life deal, the overall size of which was upsized from $1.25 billion.

The company downsized its bank deal to $250 million from $500 million.

Proceeds will be used to repay all existing senior corporate credit facilities, with any remaining proceeds to be used for general corporate purposes.

Issuer:	Delta Air Lines, Inc.
Face amount:	$1.35 billion, increased from $1.25 billion
Proceeds:	$1.311 billion (approximate)
Bookrunners:	J.P. Morgan Securities Inc., Barclays Capital Inc., UBS Investment Bank
Trade date:	Sept. 23
Distribution:	Rule 144A for life
Five-year notes
Face amount:	$750 million
Proceeds:	$739.223 million (approximate)
Maturity:	Sept. 15, 2014
Security description:	Senior secured notes
Coupon:	9½%
Price:	98.563
Yield:	9 7/8%
Spread:	744 bps
Call features:	Make-whole call at Treasuries plus 50 bps until Sept. 15, 2011, then callable at 107.125, 104.750, par on and after Sept. 15, 2013
Equity clawback:	35% at 109.50 until Sept. 15, 2011
Ratings:	Moody's: Ba2
	Standard & Poor's: BB
Price talk:	9 7/8% area
Second-lien notes
Face amount:	$600 million, increased from $500 million
Proceeds:	$571.368 million
Maturity:	March 15, 2015
Security description:	Senior second-lien notes
Coupon:	11¾%
Price:	95.288
Yield:	13%
Spread:	1,056 bps
Call features:	Make-whole call at Treasuries plus 50 bps until March 15, 2012, then callable at 108.813, 105.875, par on and after March 15, 2014
Equity clawback:	35% at 111.75 until March 15, 2012
Rating:	Moody's: B2
Price talk:	13% area

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