Item 1.01 Entry into a Material Definitive Agreement.
Note Purchase Agreement
On March 29, 2022, Sun Country, Inc. (“Sun Country”), a wholly owned subsidiary of Sun Country Airlines Holdings, Inc. (“Holdings” and together with Sun Country, the “Company”), and Wilmington Trust, National Association, as subordination agent and pass through trustee (the “Trustee”) under two pass through trusts newly formed by Sun Country (the “Pass Through Trusts”), entered into a Note Purchase Agreement, dated as of March 29, 2022 (the “Note Purchase Agreement”).
The Note Purchase Agreement provides for the issuance by Sun Country of two series of equipment notes (the “Equipment Notes”) in the aggregate principal amount of $188,277,000 to finance thirteen Boeing 737-800 aircraft (the “Aircraft”). Pursuant to the Note Purchase Agreement, the Trustee agreed to purchase the Equipment Notes to be issued under separate Trust Indentures and Mortgages (each, an “Indenture” and collectively, the “Indentures”) with respect to such Aircraft.
Each Indenture contemplates the issuance of the Equipment Notes in two series: Series A, bearing interest at the rate of 4.84% per annum, and Series B, bearing interest at the rate of 5.75% per annum, in aggregate principal amounts of $142,830,000 and $45,447,000, respectively. The Equipment Notes are to be purchased by the Trustee, using the proceeds from the sale of Class A Pass Through Certificates, Series 2022-1A (the “Class A Certificates”) and Class B Pass Through Certificates, Series 2022-1B (the “Class B Certificates” and together with the Class A Certificates, the “Certificates”), to be issued through the Pass Through Trusts on or about March 30, 2022 to facilitate the financing of twelve of the Aircraft, and on or before September 15, 2022 to facilitate the financing of the thirteenth Aircraft.
The interest on the Equipment Notes is payable semi-annually on each March 15 and September 15, beginning on September 15, 2022. The principal payments of the Equipment Notes are scheduled for payment on March 15 and September 15 of each year, commencing on September 15, 2022. The final payments on the Series A Equipment Notes and the Series B Equipment Notes will be due on March 15, 2031 and March 15, 2029, respectively.
The maturity of the Equipment Notes may be accelerated upon the occurrence of certain events of default, including a failure by Sun Country (in some cases after notice or the expiration of a grace period, or both) to make payments under the applicable Indenture when due or to comply with certain covenants. The Equipment Notes issued with respect to each Aircraft will be secured by a lien on such Aircraft and will be cross collateralized by the other Aircraft financed pursuant to the Note Purchase Agreement.
As of April 1, 2022, Sun Country had issued $121,814,000 aggregate principal amount of Series A Equipment Notes and $38,759,000 aggregate principal amount of Series B Equipment Notes pursuant to the Note Purchase Agreement.
The Certificates were offered for sale in reliance on exemptions from registration under the Securities Act of 1933, as amended (the “Securities Act”) for offers and sales of securities that do not involve a public offering solely to persons who are “accredited investors” within the meaning of paragraph (1), (2), (3) or (7) of Rule 501(a) of Regulation D under the Securities Act. The Company relied on these exemptions from registration based in part on acknowledgements, representations and agreements made by the purchasers in a certificate purchase agreement.
The foregoing description of these agreements and instruments is qualified in its entirety by reference to these agreements and instruments, copies of which are filed herewith as exhibits and are incorporated by reference herein.
