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Sun Country Targets $240 Million From IPO Launch, With Goal to Payback Government Loans

Sun Country Targets $240 Million From IPO Launch, With Goal to Payback Government Loans
Joe Cortez

Leisure carrier Sun Country Airlines is hoping to raise up to $240 million from their upcoming initial public offering, with the initial share price between $21 and $23. The Minneapolis-based carrier will offer over 9 million shares to the public, and trade on the Nasdaq Global Select Market.

Flyers now know the details about Sun Country Airlines’ anticipated initial public offering (IPO), including the target price and how many shares of the airline will be for sale. In a press release, the Minneapolis-based carrier announced their intentions for their upcoming launch on the Nasdaq Global Select Market.

Airline Wants to Raise Money to Pay Off CARES Act Loans

Although the airline has not announced when they will launch on the Nasdaq market, Sun Country says it will put 9,090,909 shares of common stock up for sale. The target launch price is expected to be between $21 and $23, which could bring the carrier a cash influx of up to $240 million.

In turn, the airline will use “portion of the net proceeds from the offering to repay in full all amounts outstanding under the CARES Act Loan and to pay fees and expenses in connection with the offering.” According to a report by the U.S. Treasury, Sun Country took out a $45 million loan from the government at the height of the COVID-19 pandemic, using their Sun Country Rewards loyalty program as collateral. Under the terms of the loan, Sun Country is required to maintain at least 90 percent of their staffing levels “to the extent practicable,” and agree to restrictions on employee compensation, stock buybacks and dividend distribution to shareholders.

After the IPO is opened to investors, Apollo Global Management will still maintain a 50 percent share of Sun Country. The alternative asset management company purchased the airline from the owners of a countertop company in 2017, which purchased Sun Country out of bankruptcy six years earlier. The airline also has a contract with Amazon to operate Air Prime cargo flights throughout the year, and has several aircraft dedicated to the partnership.

IPO Comes as Airlines Get Creative on Paying Back CARES Act Loans

When the IPO launches, Sun Country will trade under the ticker “SNCY.” The move is the latest show of how airlines are getting creative in repaying their government loans. American Airlines announced they would leverage their AAdvantage program under a new subsidiary to raise $5 billion, with the goal of repaying their CARES Act obligations.

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