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Delta Air Said to Increase Refinancing Loans to $1.95 Billion

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Oct. 15 (Bloomberg) -- Delta Air Lines Inc. increased the size of a loan it’s seeking to refinance debt to $1.95 billion from $1.7 billion, according to a person with knowledge of the transaction.

The world’s second-biggest carrier boosted the size of a six-year B-1 term portion to $1.1 billion from $1 billion and expanded a 3 ½-year B-2 piece to $400 million from $250 million, said the person, who asked not to be identified because the information is private.

The B-1 portion will now pay interest at 4 percentage points more than the London interbank offered rate, compared with a range of 4 percentage points to 4.25 percentage points, with a 1.25 percent minimum on the lending benchmark, according to the person.

The company is proposing to sell the loan at 99 cents on the dollar, the person said, reducing proceeds for the company and boosting the yield to investors.

Lenders are being offered one-year soft-call protection of 101 cents, meaning the company would have to pay 1 cent more than face value to refinance the B-1 piece during the first year, the person said.

Delta is proposing to pay 3 percentage points more than Libor with a 1.25 percent floor on the B-2 piece, down from 3 percentage points to 3.25 percentage points initially offered, the person said. The debt is expected to be sold at 99 cents, according to the person.

Barclays Plc, Bank of America Corp., BNP Paribas SA, Citigroup Inc., Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group Inc., JPMorgan Chase & Co., Morgan Stanley and UBS AG are arranging the loans and commitments are due today by 5 p.m. in New York, the person said. The Atlanta-based company is also seeking a $450 million five-year revolving line of credit, according to data compiled by Bloomberg.

Paul Jacobson, chief financial officer of Delta Air Lines, didn’t immediately respond to an e-mail seeking comment. bank loan mutual funds and hedge funds.

United Continental Holdings Inc. is the world’s biggest airline.

To contact the reporter on this story: Michael Amato in New York at mamato3@bloomberg.net

To contact the editor responsible for this story: Faris Khan at fkhan33@bloomberg.net

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