ATLAS AIR WORLDWIDE HOLDINGS, INC. (NASDAQ:AAWW) Files An 8-K Entry into a Material Definitive Agreement
Item1.01.
| Entry into a Material Definitive Agreement |
Supplemental Indenture Relating to Convertible Senior
Notes
On May23, 2017, Atlas Air Worldwide Holdings, Inc. (the Company)
completed its previously announced underwritten public offering
(the Offering) of $289million aggregate principal amount
of the Companys 1.875% Convertible Senior Notes due 2024 (the
Notes), which includes $29million principal amount of
Notes issued to the partial exercise of the over-allotment option
granted to the underwriters in the Offering. The Company issued
the Notes to a base indenture, dated as of June3, 2015 (the
Base Indenture), between the Company and Wilmington Trust,
National Association, as trustee (the Trustee), as
supplemented by the second supplemental indenture, dated May23,
2017 (the Supplemental Indenture and together with the
Base Indenture, the Indenture) with the Trustee. The Notes
will bear interest at a rate of 1.875% per year payable
semi-annually in arrears on June1 and December1 of each year,
commencing December1, 2017. The Notes will mature on June1, 2024,
unless earlier converted or repurchased to their terms.
The initial conversion rate of the Notes is 16.3713 shares of
common stock of the Company, par value $0.01 per share (Common
Stock), per $1,000 principal amount of the Notes (which is
equivalent to an initial conversion price of approximately $61.08
per share of Common Stock). The conversion rate for the Notes
will be subject to adjustments upon the occurrence of certain
specified events but will not be adjusted for accrued and unpaid
interest. In addition, upon the occurrence of a make-whole
fundamental change (as defined in the Supplemental Indenture),
the Company will, in certain circumstances, increase the
conversion rate by a number of additional shares for a holder
that elects to convert the Notes in connection with such
make-whole fundamental change.
Prior to the close of business on the business day immediately
preceding September1, 2023, the Notes will be convertible only
under the following circumstances: (1)during any calendar quarter
commencing after the calendar quarter ending on September30, 2017
(and only during such calendar quarter), if the last reported
sale price (as defined in the Supplemental Indenture) of the
Common Stock for at least 20 trading days (whether or not
consecutive) during a period of 30 consecutive trading days
ending on the last trading day of the immediately preceding
calendar quarter is greater than or equal to 130% of the
conversion price on each applicable trading day; (2)during the
five business day period after any five consecutive trading day
period in which the trading price (as defined in the Supplemental
Indenture) per $1,000 principal amount of the Notes for each
trading day of such period was less than 98% of the product of
the last reported sale price of Common Stock and the applicable
conversion rate on each such trading day; or (3)upon the
occurrence of specified corporate events set forth in the
Supplemental Indenture. On or after September1, 2023, until the
close of business on the second scheduled trading day immediately
preceding the maturity date, holders may convert the Notes at any
time, regardless of the foregoing circumstances.
Upon conversion, the Notes will be settled in cash, shares of
Common Stock or a combination thereof, at the Companys election.
The Company may not redeem the Notes prior to the maturity date;
however, upon the occurrence of a fundamental change (as defined
in the Supplemental Indenture), holders may require the Company
to purchase all or a portion of the Notes for cash at a price
equal to 50% of the principal amount of the Notes to be purchased
plus any accrued and unpaid interest to, but excluding, the
applicable fundamental change repurchase date (as defined in the
Supplemental Indenture).
The Notes will be the Companys senior unsecured obligations and
will rank senior in right of payment to any of the Companys
indebtedness that is expressly subordinated in right of payment
to the Notes, will rank equally in right of payment with any of
the Companys unsecured indebtedness that is not so subordinated,
will be effectively junior in right of payment to any of the
Companys secured indebtedness to the extent of the value of the
assets securing such indebtedness and will be structurally
subordinated to all indebtedness and other liabilities of the
Companys subsidiaries.
The Indenture provides for customary events of default.
1
The summary of the foregoing transactions is qualified in its
entirety by reference to the text of the Base Indenture, the
Supplemental Indenture and the Global 1.875% Convertible Senior
Note due June1, 2024, which are filed as Exhibits 4.1, 4.2 and
4.3 respectively, with this Current Report on Form 8-K and are
incorporated herein and into the Registration Statement by
reference.
Convertible Note Hedge and Warrant Transactions
On May17, 2017, the Company entered into base convertible note
hedge transactions and base warrant transactions with Morgan
Stanley Co. International plc, Citibank, N.A. and BNP Paribas
(the Option Counterparties). In connection with the
partial exercise by the Underwriters of their over-allotment
option to purchase additional Notes, on May18, 2017, the Company
entered into additional convertible note hedge transactions and
additional warrant transactions with the Option Counterparties.
The base convertible note hedge transactions and the additional
convertible note hedge transactions are collectively referred to
hereafter as the convertible note hedge transactions. Similarly,
the base warrant transactions and the additional warrant
transactions are collectively referred to hereafter as the
warrant transactions.
The convertible note hedge transactions are expected generally to
reduce the potential dilution to the Common Stock upon conversion
of the Notes and/or offset potential cash payments the Company is
required to make in excess of the principal amount of the
converted Notes in the event that the market value per share of
the Common Stock, as measured under the terms of the convertible
note hedge transactions, is greater than the strike price of the
convertible note hedge transactions (which strike price initially
corresponds to the conversion price of the Notes and is subject
to certain adjustments generally similar to the adjustments to
the conversion price contained in the Notes). On May23, 2017, at
the closing of the Offering, the Company paid an aggregate amount
of approximately $70.1million to the Option Counterparties for
the convertible note hedge transactions.
The warrant transactions allow the Option Counterparties to
acquire, subject to customary anti-dilution adjustments and the
net share settlement provisions contained therein, initially
4,731,306 shares of Common Stock at a strike price of $92.20 per
share, such number of shares of Common Stock and strike price
subject to adjustment in accordance with the terms of the
warrants. The warrants are initially exercisable over a 140
trading day period beginning on September1, 2024. The warrants
could have a dilutive effect on the Common Stock to the extent
that the market value per share of the Common Stock exceeds the
strike price of the applicable warrants under the terms of the
warrant transactions. Accordingly, when the convertible note
hedge transactions and the warrant transactions are taken
together, the extent to which the convertible note hedge
transactions reduce the potential dilution to the Common Stock
(and/or the cash payments in excess of the principal amount of
the Notes) upon conversion of the Notes is effectively capped by
the warrant transactions at the $92.20 strike price of the
warrants (such strike price subject to adjustment in accordance
with the terms of the warrant transactions). The warrants were
issued to the exemption provided by Section 4(a)(2) of the
Securities Act of 1933, as amended. On May23, 2017, at the
closing of the Offering, the Company received aggregate proceeds
of approximately $38.1million from the sale of the warrants to
the Option Counterparties.
The convertible note hedge transactions and the warrant
transactions are each separate transactions, entered into by the
Company with the Option Counterparties, and are not part of the
terms of the Notes. Holders of the Notes will not have any rights
with respect to the convertible note hedge transactions or
warrant transactions.
The summary of the foregoing transactions is qualified in its
entirety by reference to the text of the convertible note hedge
transactions confirmations relating to the convertible note hedge
transactions and the warrant transactions confirmations relating
to the warrant transactions, in each case with the Option
Counterparties, which are filed as Exhibits 10.1 through 10.12 to
this Current Report on Form8-K and are incorporated herein by
reference.
Item2.03 Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a
Registrant
The information set forth under Item 1.01 of this Current Report
on Form 8-K under the heading Indenture and Supplemental
Indenture Relating to Convertible Senior Notes is incorporated
herein by reference.
2
| Item9.01 | Financial Statements and Exhibits |
(d) Exhibits
|
Exhibit No. |
Description |
|
| 4.1 |
Senior Indenture, dated June3, 2015, between the Company and Wilmington Trust, National Association, as Trustee (Incorporated by reference to Exhibit 4.1 to the Companys Current Report on Form 8-K dated June3, 2015 (FileNo. 001-16545)). |
|
| 4.2 |
Second Supplemental Indenture, dated May23, 2017 between the Company and Wilmington Trust, National Association, as Trustee. |
|
| 4.3 | 1.875% Convertible Senior Note due 2024. | |
| 10.1 |
Base convertible note hedge transaction confirmation, dated as of May17, 2017, between Morgan Stanley Co. International plc and the Company. |
|
| 10.2 |
Base warrant transaction confirmation, dated as of May17, 2017, between Morgan Stanley Co. International plc and the Company. |
|
| 10.3 |
Additional convertible note hedge transaction confirmation, dated as of May18, 2017, between Morgan Stanley Co. International plc and the Company. |
|
| 10.4 |
Additional warrant transaction confirmation, dated as of May18, 2017, between Morgan Stanley Co. International plc and the Company. |
|
| 10.5 |
Base convertible note hedge transaction confirmation, dated as of May17, 2017, between Citibank, N.A. and the Company. |
|
| 10.6 |
Base warrant transaction confirmation, dated as of May17, 2017, between Citibank, N.A. and the Company. |
|
| 10.7 |
Additional convertible note hedge transaction confirmation, dated as of May18, 2017, between Citibank, N.A. and the Company. |
|
| 10.8 |
Additional warrant transaction confirmation, dated as of May18, 2017, between Citibank, N.A. and the Company. |
|
| 10.9 |
Base convertible note hedge transaction confirmation, dated as of May17, 2017, between BNP Paribas and the Company. |
|
| 10.10 |
Base warrant transaction confirmation, dated as of May17, 2017, between BNP Paribas and the Company. |
|
| 10.11 |
Additional convertible note hedge transaction confirmation, dated as of May18, 2017, between BNP Paribas and the Company. |
|
| 10.12 |
Additional warrant transaction confirmation, dated as of May18, 2017, between BNP Paribas and the Company. |
3
About ATLAS AIR WORLDWIDE HOLDINGS, INC. (NASDAQ:AAWW)
Atlas Air Worldwide Holdings, Inc., (AAWW) is a holding company with a principal operating subsidiary, Atlas Air, Inc. (Atlas). The Company is a provider of outsourced aircraft and aviation operating services, operating a fleet of 750 freighters, as well as operating 747 and 767 passenger aircraft and 767 freighters. It also owns and dries leases a fleet of aircraft, including over six 777 freighters. The Company operates through three segments, including aircraft, crew, maintenance and insurance (ACMI), Charter and Dry Leasing. Its ACMI segment provides aircraft, crew, maintenance and insurance services to customers. Its Charter segment provides full planeload air cargo and passenger aircraft charters to customers, including the United States military air mobility command (AMC), brokers, freight forwarders, direct shippers, airlines, sports teams and fans, and private charter customers. Its Dry Leasing segment provides cargo and passenger aircraft and engine leasing solutions. ATLAS AIR WORLDWIDE HOLDINGS, INC. (NASDAQ:AAWW) Recent Trading Information
ATLAS AIR WORLDWIDE HOLDINGS, INC. (NASDAQ:AAWW) closed its last trading session up +0.30 at 48.75 with 459,198 shares trading hands.