Spirit Airlines has confirmed that it will proceed with its independent restructuring plan, after rejecting Frontier Group Holdings’ latest offer on February 4, 2025.
According to Spirit, Frontier’s proposal would have provided Spirit shareholders with $400 million in second-lien debt issued by Frontier and a 19% equity stake in the merged airline. Additionally, the deal would have exempted Spirit from completing its $350 million rights offering and required the cancellation of a previously court-approved $35 million penalty under the Backstop Commitment Agreement signed in November 2024.
However, Spirit Airlines stated that the offer did not address key material risks previously identified by the company. The airline argued that the proposed shareholder value was lower than what Spirit expects under its current reorganization plan and that Frontier’s proposal presented uncertainties regarding timing, costs, and regulatory and legal approvals.
Negotiations and Spirit’s Counteroffer
On February 7, Spirit submitted a counteroffer proposing that Frontier improve the transaction terms. The revised deal included:
- $600 million in debt and $1.185 billion in equity for Spirit shareholders.
- A market-based mechanism to determine shareholder stakes in the merged company.
- A requirement for Frontier to pay the $35 million penalty owed by Spirit under the Backstop Commitment Agreement.
On February 10, Frontier rejected the counteroffer and reaffirmed its original proposal.
Spirit Airlines Moves Forward with Restructuring Plan
Spirit confirmed that it will proceed with its Chapter 11 restructuring, with a confirmation hearing for its reorganization plan scheduled for February 13, 2025. According to the airline:
"Approximately 99.99% of eligible creditors have approved the plan, with only two objections remaining."
The company expects to complete the restructuring process in Q1 2025, aiming to significantly reduce debt and improve its financial position.
You might be interested
Failed Mergers and Spirit’s Financial Struggles
Spirit Airlines filed for Chapter 11 bankruptcy protection after multiple failed merger attempts.
- In 2022, Spirit attempted to merge with Frontier, but the deal was rejected by shareholders.
- In 2023, Spirit announced a planned merger with JetBlue, but in January 2024, a federal judge blocked the acquisition, citing concerns that it would reduce competition in the industry.
With ongoing financial losses and upcoming debt maturities, Spirit turned to Chapter 11 protection to restructure its finances and secure its long-term viability.
AUTOR
Contando la aviación desde marzo del año 2000. Fundador y Managing Editor de Aviacionline.
Comentarios
Para comentar, debés estar registrado
Por favor, iniciá sesión