Spirit Airlines, Inc. (NYSE:SAVE) shares are trading higher premarket on Monday. The company announced a restructuring support agreement (RSA) with a vast majority of its loyal and convertible bondholders to implement a comprehensive balance sheet restructuring.

The plan aims to reduce debt, increase financial flexibility, support long-term success and accelerate investments to improve guest travel experiences and value.

The company’s key measures include a $350 million backstopped equity investment from existing bondholders and the equitization of $795 million in funded debt.

In addition, bondholders are providing $300 million in DIP financing, supplemented by Spirit’s cash reserves and operating cash flow, to support the restructuring process.

Spirit has filed a plan of reorganization as part of the Chapter 11 process, which incorporates the terms of the RSA and is pending court approval.

With the support of a supermajority of loyal and convertible bondholders, the company expects to emerge from Chapter 11 in the first quarter of 2025.

First day motions are also being filed to ensure normal business operations during the trial.

As a result of the filing, Spirit expects to soon be delisted from the NYSE, while its common stock will continue to trade over-the-counter. The shares are expected to be canceled and will no longer have any value as part of the restructuring.

Ted Christie, President and Chief Executive Officer of Spirit, said: “This series of transactions will significantly strengthen our balance sheet and position Spirit for the future as we continue to execute on our strategic initiatives to transform our guest experience, through new, enhanced travel options , greater value and greater flexibility.”

Last week, Spirit filed the form, indicating it will not be able to file third-quarter 2024 earnings on time as the company has diverted resources from reviewing and completing financial statements to ongoing debt restructuring discussions.

This came after Spirit’s merger talks with Fronter Group Holdings Inc. and and its takeover by JetBlue Airways fell through.

Price promotion: SAVE shares are up 3.70% to $1.12 premarket at last check Monday.

Photo: Courtesy of Smart Calendar via Shutterstock

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