Spirit Airlines (OTC:SAVEQ) Inc. (NYSE:SAVE) has reported an event of default under its financial obligations, automatically accelerating the maturity of its debts due to its voluntary Chapter 11 bankruptcy proceedings, according to a recent SEC filing.
The company, with a market capitalization of $448 million and total debt of $579.7 million, disclosed this information in a Form 8-K filed with the Securities and Exchange Commission today. According to InvestingPro data, Spirit maintains a current ratio of 1.3, indicating its short-term liquidity position before the filing.
The default is a result of the Chapter 11 cases filed on Monday, which triggered the acceleration of its 8.00% Senior Secured Notes due 2025. Despite the challenging situation, InvestingPro analysis shows the company maintained an Altman Z-Score of 5.56 and generated EBITDA of $273.6 million in the last twelve months. The Indenture, dated September 17, 2020, and as amended, outlines that principal and interest are now immediately due and payable. However, any enforcement actions are stayed under the bankruptcy code.
The bankruptcy filing by Spirit Airlines and certain subsidiaries occurred on November 25, 2024, in the Southern District of New York. This process aligns with Spirit’s previously announced pre-arranged chapter 11 reorganization efforts.
In relation to the company's stock, Spirit Airlines was notified on November 18, 2024, that the NYSE Regulation intends to delist its common stock. Following the suspension of trading on the NYSE, the stock began trading on the OTC Pink Market under the symbol "SAVEQ" starting November 19, 2024. For comprehensive analysis of distressed companies and their potential recovery prospects, investors can access detailed financial health metrics through InvestingPro, which provides real-time data and expert insights.
In other recent news, Spirit Airlines, Inc. has garnered approval from bondholders for amendments related to its 8.00% Senior Secured Notes due in 2025. The amendments aim to eliminate certain bankruptcy remote provisions and include modifications to the Indenture, the Collateral Agency and Accounts Agreement, and the Security Agreement. This development follows the airline's notification of its impending delisting from the New York Stock Exchange due to a voluntary reorganization under bankruptcy law.
Spirit Airlines has also transitioned to the OTC Pink Market for its stock trading following the delisting. Despite this shift, the airline assures that its business operations will remain unaffected. However, it has warned current and potential stockholders about the possibility of a less liquid market for its stock on the OTC Pink Market, which could potentially impact the trading price.
These recent developments come amidst Spirit Airlines' Chapter 11 bankruptcy proceedings. While the airline has not expressed any plans to appeal the NYSE's delisting decision, it has cautioned investors about the speculative nature of trading in the company's common stock during the Chapter 11 proceedings. The airline has highlighted that trading prices may not reflect the actual recovery, if any, for the holders of the common stock in the bankruptcy process.
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