Southwest Airlines has tacked on $75 million in additional financing after the J.P. Morgan and Citibank-led credit was oversubscribed. "The demand was there," explained Laura Wright, v.p. of finance for Southwest Airlines. "We were going to go out for $500 million and it was oversubscribed. With the current environment, we felt that more liquidity was good." The company refinanced a $475 million, five-year revolver that expired this month.
The new credit comprises an unsecured $287.5 million, five-year revolver and a $287.5 million, 364-day facility. "One of the things we are really pleased with is that it is unsecured," said Wright, noting that not having to put up collateral to back the loan offers the company more flexibility. The 364-day tranche was added because the structure is more favorable to banks, Wright said. The 364-day facility is not a commercial paper backstop, she said. The company does not have a commercial paper program because its business model is linked to the long-term nature of its assets aircraft and its funding needs. Wright could not disclose pricing, but noted that pricing on the new deal increased slightly due to general credit market conditions.
SunTrust and BANK ONE participated as agents on the deal. The syndicate included ABN Amro, Barclays Capital, BNP Paribas, Deutsche Bank, Société Générale, Wells Fargo, Comerica, UBS Warburg, Wachovia Bank, Bank Of Tokyo-Mitsubishi, and Mitsubishi Trust. J.P. Morgan led the last deal along with Bank of America, which has bowed out of the transportation industry, said Wright.