Seat2C

FWAAA, you should have read the S-1 closer. You missed the 'Letter of Credit Facility' on page 124.

Letter of Credit Facility

In connection with the 2014 Recapitalization, we anticipate that the Virgin Group will arrange for a $100.0 million Letter of Credit Facility to be issued on our behalf to certain companies that process substantially all of our credit card transactions. The Letter of Credit Facility will allow these companies to release approximately $100.0 million of cash collateral to us. In turn, we intend to use the released cash to repay $100.0 million of the principal and accrued interest due under certain of the 5% Notes held by the Virgin Group. We anticipate that the Letter of Credit Facility would contain an annual commitment fee of 5.0% payable by us to the Virgin Group, and that the Virgin Group would cause this Letter of Credit Facility to be provided for a period of five years from the date of this offering. In addition, we would also be responsible for annual fees associated with the issuance and maintenance of the Letter of Credit Facility. The Letter of Credit Facility would only become an obligation of ours if one or both of our credit card processors were to draw on the Letter of Credit Facility. In addition, we will be restricted from incurring any future secured indebtedness related to our assets that would be unencumbered after the consummation of the transactions contemplated by the 2014 Recapitalization Agreement unless our guaranty obligations to the Virgin Group are secured on a pari passu basis with such secured debt. The Letter of Credit Facility will be reduced or terminated to the extent that collateral requirements are decreased or eliminated by our credit card transaction processors. For more information, see “2014 Recapitalization” elsewhere in this prospectus.



On page 41, Credit Card Holdback on 31 March 2014 was shown to be $160,074,000. So the IPO will actually free up quite a bit of restricted funds that will be used to pay down debt (although it's pretty much a wash in annual costs, as they have to pay Virgin Group $5 million/yr for the Letter of Credit Facility).



I personally found the 2013 and 2014 Recapitalization portions of the S-1 to be the most interesting, as that looks like where most of the financial shell games lurk. In exchange for some fairly large haircuts, Cyrus Capital and Virgin Group got a huge number of exercisable warrants that will significantly increase the stock float after the lockup period should they decide to convert their warrants to stock.
I won't even get into the poison pill provisions in the S-1. I haven't read the S-1 closely, but it's an interesting read.


From my first look at the S-1, this should give Virgin America enough cash on hand to keep going for the next 3 years. If they can improve their margins, they've got a chance of surviving longer term.